Hyosung Heavy Industries (298040) Valuation Analysis — 765kV Orders and Forward PER of 44x

Hyosung Heavy Industries (298040) Company Analysis: 765kV Transformer Order Momentum and Forward PER of 44.0x

Hyosung Heavy Industries set a quarterly record with KRW 4.2T (≈$2.8B) in new orders for its Heavy Industries segment in Q1 2026 (+107.8% year-over-year). With Trailing PER at 66.9x versus Forward PER at 44.0x, the pace of earnings improvement is narrowing the valuation gap. Expanding U.S. power grid investment and a leadership position in 765kV transformer supply are the key variables determining the medium-term earnings trajectory.

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1. Business Overview and Core Operations

Hyosung Heavy Industries (298040) is a heavy industry and construction company under Hyosung Group, comprising a heavy industry division producing power equipment (transformers, circuit breakers, STATCOM, etc.) and a construction division engaged in residential and public projects. Market capitalization stands at approximately 37조원 (≈$24.7B), with foreign ownership at 28.4%. In Q1 2026 on a consolidated basis, revenue reached 1조 3,582억원 (≈$907.9M) (up +26.2% year-over-year) and operating profit reached 1,523억원 (≈$101.8M) (up +48.8% year-over-year). The heavy industry division's order backlog stood at 15.1조원 (≈$10.1B) at the end of Q1, a 44.4% expansion year-over-year, with North America accounting for 53% of the total.

📌 Q1 2026 heavy industry order backlog of 15.1조원 (≈$10.1B), with U.S. share at 53%, expanded year-over-year

2. Core Product Competitiveness Analysis

The core competitive areas are 765kV ultra-high-voltage transformers and 800kV gas-insulated circuit breakers (GCB), with orders secured from major ISOs including ERCOT, MISO, and PJM in the United States. Of the 4.2조원 (≈$2.8B) in new heavy industry orders in Q1, 77% came from North America, and the company's strong market share in 765kV transformers in the U.S. forms the foundation for linked order wins. STATCOM and solid-state transformer (SST) businesses are also under development; the SST completed development of a 22.9kV-class unit in 2022 and is pursuing DC power supply projects for U.S. data centers. The Memphis, U.S. factory is planned to expand production capacity by more than 50% by 2028*1.

Category	Details
Position	Leading supplier of 765kV ultra-high-voltage transformers in the U.S.; holds 800kV GCB certification
Competitive Advantages	Early certification in high-voltage GIS·GCB enables linked order wins; North America accounts for 53% of order backlog
Competitive Disadvantages	Order concentration in a single region (North America); supply constraints until Memphis capacity expansion is complete

3. Valuation Analysis

Based on the closing price of 3,730,000원 (≈$2,493.3) on May 17, 2026, the Trailing PER is 66.9x and the Forward PER is 44.0x (Naver Finance). The PBR stands at 14.77x, reflecting a significant premium over book value. Per Eugene Investment & Securities, the 2026 operating profit is estimated at 1조 1,621억원 (≈$776.8M)*2, with EPS of 100,156원 (≈$66.9)*3, representing year-over-year improvements of 55.6% and 79.6%, respectively. The 22.9x compression in Forward PER relative to Trailing PER reflects the pace of annual earnings growth, and based on the 2027 EPS of 143,590원 (≈$96.0)*4, the current share price implies a multiple of 26.0x.

📌 Forward PER of 44.0x represents a 22.9x compression versus Trailing PER of 66.9x — a result of the 2026F operating profit improvement of 55.6%*2

Metric	Current	Sector Average	Interpretation
Trailing PER	66.9x	N/A	High premium based on 2025 actual earnings
Forward PER	44.0x	N/A	Compressed when factoring in 2026F earnings improvement
PBR	14.77x	N/A	Significant premium over book value

4. Risk Factors and Monitoring Points

The tariff costs of 170억원 (≈$11.4M) incurred in 1Q26 are currently under refund procedures, though the timing of recovery remains uncertain. The structure in which approximately 400억원 (≈$26.7M) of high-margin North American shipments are deferred across quarters as in-transit inventory limits earnings visibility. PBR at 14.77x represents a high level relative to book value, and new orders in the construction segment declined from 2,897억원 (≈$193.6M) in 2024 to 2,018억원 (≈$134.9M) in 2025.

• ⚠️ Delays in U.S. reciprocal tariff refunds and uncertainty in tariff policy (1Q26 tariff costs of 170억원 (≈$11.4M))
• ⚠️ Risk of quarterly operating profit deferral due to in-transit inventory processing of high-margin North American shipments

• 📌 Quarterly heavy industry new order amounts and North American share (whether the quarterly ~4.2조원 (≈$2.8B) level is maintained)
• 📌 Timing of tariff refund recognition and cumulative annual tariff costs (versus full-year 2025 tariff costs of 260억원 (≈$17.4M))

5. Recent DART Filings

As of the analysis date (2026-05-18), no relevant DART regulatory filings were available in the input data; this section has been left blank accordingly.

Hyosung Heavy Industries recorded KRW 4.2T (≈$2.8B) in new orders in Q1 (a quarterly record), centered on 765kV ultra-high-voltage transformers and 800kV GCBs, and expanded its North American order backlog share to 53%. Forward PER of 44.0x represents a compression from Trailing 66.9x; the timing of tariff rebates and the recognition schedule for high-margin North American volumes are the key indicators to watch for second-half earnings.

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📎 References & Estimation Basis

1. ^*1 Memphis, U.S. plant planned to expand production capacity by over 50% by 2028 — Source: based on company announcements as reported in Seoul Sinmun (2026.05.14). Not independently verified against official company IR materials.
2. ^*2 2026F operating profit KRW 1,162.1B (≈$776.7M) — Source: Eugene Investment & Securities research report (2026.04.29, analyst Heo Jun-seo) estimate. IBK Investment & Securities estimates KRW 1,137.2B (≈$760.0M).
3. ^*3 2026F EPS KRW 100,156 (≈$67.0) — Source: Eugene Investment & Securities research report (2026.04.29) estimate. IBK Investment & Securities estimate is KRW 86,085 (≈$57.5). The implied EPS embedded in the Naver Finance Forward PER of 44.0x is approximately KRW 84,772 (≈$56.7).
4. ^*4 2027F EPS KRW 143,590 (≈$96.0) — Source: Eugene Investment & Securities research report (2026.04.29) estimate. Based on the current share price of KRW 3,730,000 (≈$2,492.6), the implied 2027F PER works out to 25.98x.
5. ^*5 USD equivalents (≈$) are approximate, calculated at 1 USD = 1,496 KRW (as of 2026-05-18, source: Yahoo Finance).

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