Hyosung Heavy Named Top Pick as Macquarie Ranks South Korean Power Equipment Stocks

Macquarie has ranked its top choices among South Korean power equipment manufacturers, naming Hyosung Heavy as its leading pick. The brokerage highlighted accelerating order momentum across the sector, driven by surging demand for high-voltage transformers and the ongoing buildout of data-center infrastructure.

Hyosung Heavy Leads the Pack

Macquarie reaffirmed Hyosung Heavy as its top selection, maintaining an Outperform rating and a price target of ₩4.7 million, which implies a potential upside of 76%. The firm cited Hyosung's superior earnings visibility, strong momentum in 765kV transformer orders, and expanding profit margins as key factors. Macquarie noted the company's valuation remains at a discount to global peers despite having the strongest order growth in the sector.

HD Hyundai Electric was ranked second, also with an Outperform rating and a price target of ₩1.6 million, suggesting a 102% upside. The brokerage pointed to a significant 23% upgrade in the company's fiscal 2026 order guidance, a new ₩1.1 trillion framework agreement with a hyperscaler, and the production ramp-up at its Alabama facility.

Data Centers and Grid Upgrades Fuel Demand

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The positive outlook for these companies is anchored in powerful secular trends. The rapid expansion of artificial intelligence and cloud computing is fueling a global boom in data center construction, which requires vast amounts of stable, high-voltage power. This, in turn, is forcing upgrades to aging electrical grids, creating a strong and sustained demand cycle for transformers and related equipment that these South Korean firms specialize in.

Other Key Ratings

Macquarie's analysis also covered two other key players in the sector:

• Sanil Electric: The company remains rated Outperform, though its price target was cut by 16% to ₩270,000 due to sector-wide multiple compression. Macquarie anticipates healthy order growth from its exposure to U.S. data centers, particularly through its relationship with Bloom Energy.
• LS Electric: This stock was upgraded to Neutral from Underperform, with an unchanged price target of ₩170,000. Macquarie stated that a recent stock price correction has priced in much of the downside risk, but noted it is waiting for clearer evidence of margin expansion before adopting a more constructive view.