Power equipment stocks rallied across the board during Thursday's trading session. Amid sustained expectations for power grid investment driven by the expansion of artificial intelligence (AI) data centers, bargain hunting flowed into stocks that had recently undergone a correction.
According to the Korea Exchange, Vinatech (126340) was trading at 131,000 won, up 15,200 won, or 13.13%, from the previous session. LS Electric (006260) rose 29,000 won, or 11.98%, to 271,000 won, while Hyosung Heavy Industries (298040) gained 295,000 won, or 7.99%, to 3.988 million won. Sanil Electric (062040) (6.21%), LS (5.27%), HD Hyundai Electric (267260) (4.88%), and TC Materials (4.00%) also climbed together.
Power equipment stocks had risen steeply through early May before undergoing a roughly month-long correction amid valuation burdens and profit-taking. According to LS Securities, from early May to early June, HD Hyundai Electric (-37%), Sanil Electric (-36%), LS Electric (-35%), and Hyosung Heavy Industries (-31%) declined. After shedding the burden of their short-term surge, expectations of improving industry conditions are again being reflected in share prices.
Export indicators also supported investor sentiment. While total transformer exports were sluggish in April and May, exports of ultra-large transformers, which are mainly produced by top-tier power equipment makers, rose 41.5% and 23.3% year-on-year in April and May, respectively. This underpins sustained expectations that demand from AI data centers and U.S. power grid replacement could lead to orders for large transformers and power infrastructure.
Analysts view LS Electric's order flow positively. LS Securities said LS Electric's second-quarter orders could grow to more than 2 trillion won, and forecast that its annual orders this year could reach 5 trillion to 6 trillion won, exceeding the existing guidance of 4.1 trillion won. There is also talk that orders at Hyosung Heavy Industries and Sanil Electric could surpass the companies' targets this year.
"Power equipment has excellent basic fundamentals, including a sustained upturn in industry conditions and the resulting strong orders and earnings," said Sung Jong-hwa, an analyst at LS Securities. "Having gone through an appropriate breather correction in May and June, now is the time to pay attention again."
