HD Hyundai Electric Projects 27% Operating Profit Margin Amid Surge in Ultra-High-Voltage Transformer Demand
HD Hyundai Electric is set to achieve a 27% operating profit margin this year, driven by rising demand for ultra-high-voltage transformers linked to AI-driven data center investments. The company, along with LS Electric and Hyosung Heavy Industries, is benefiting from significant profitability in the power equipment sector, with HD Hyundai Electric's order backlog primarily consisting of lucrative U.S. contracts. Despite potential oversupply concerns, the industry expects supply shortages to persist for at least three years, leading to cautious expansion and increased R&D efforts.
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HD Hyundai Electric is projected to achieve an operating profit margin of approximately 27% this year, bolstered by a surge in demand for ultra-high-voltage transformers driven by AI-fueled data center investments. LS Electric and Hyosung Heavy Industries are also expected to exceed 18% operating profit margins in their respective sectors.
The power equipment sector has entered a 'dream margin' zone, with domestic firms experiencing significant profitability; HD Hyundai Electric recorded over 900 billion Korean won in operating profit last year and awarded a performance bonus of 1,195% of salaries. Order backlogs are filled until 2028, with over 65% of HD Hyundai Electric's backlog comprised of U.S.-origin orders, which offer higher profitability. Despite concerns over potential oversupply, the industry anticipates supply shortages for at least three years, prompting cautious expansion and increased R&D efforts.
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