Hyosung Heavy Industries (298040) 🔎 In-depth
KOSPI · Price as of 2026-08-06 · Updated 2026-08-09
Hyosung Heavy Industries is a heavy-electric-machinery company that makes ultra-high-voltage (UHV) transformers, circuit breakers, motors and power systems such as STATCOM and ESS that go into the grid linking power plants and cities, and it also runs a construction division (with its own apartment brand). In 2025 it posted revenue of ₩5.9685 trillion and operating profit of ₩747.0 billion, doubling operating profit in a single year, and in the first quarter of 2026 revenue rose 26.2% and operating profit 48.8%, building an order backlog of about ₩11.9 trillion as growth continued. The point to watch is that while a shortage of UHV transformers persists on the back of AI data centers and aging-grid replacement, it is strong on high-margin orders led by its U.S. Memphis plant, but with a debt ratio above 200% and non-operating costs such as tariffs and interest weighing on net profit, net profit may not keep pace with the growth in operating profit.
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30-second brief
Pulled directly from the computed values below — not a separately written opinion.
What do the SourceComputedEstimateReading tags mean?
Source filings and exchange data · Computed calculated from public data · Estimate our own unverified projection · Reading drafted automatically, then rule-checked. See AI & Automation.
Core valuation metric
This stock's effective sub-sector is “Power Equipment” (Shipbuilding, Machinery, Defense & Power Equipment), a type typically read first through forward P/E.
Power-equipment firms make the transformers and grid gear that move electricity, and their results swing with grid-investment cycles and large project awards. Because the backlog converting into future earnings matters more than results already booked, the forward P/E — reflecting expected earnings — is the first lens.
Price against earnings alone becomes unstable when earnings swing. Reading it together with price against assets helps gauge the downside.
This note explains how each sector is typically valued and is educational context only, not investment advice.
At-a-glance assessment financial health · growth · profitability · valuation
- Debt is somewhat higher than equity (debt ratio 222.1%).
- Revenue rose 21.9% year over year, and the pace is quickening (3-year trend: rising).
- Most recent quarter (Q1 2026) revenue was 26.2% higher than a year earlier.
- ROE is 21.2% (controlling-interest basis). It is above the sector average.
- Operating margin is 12.8%.
Ownership & governance As of 2025-12-31
Largest shareholder Hyosung 32.47% (corporate)
Controlling bloc incl. related parties 43.96%
With the controlling bloc holding 44%, the ownership structure is stable.
🔎 In-depth analysis Reading
Hyosung Heavy Industries makes the equipment needed along the path electricity travels from power plants to factories and cities. Revenue falls into two broad lines. The first is the heavy-industry division, which makes UHV transformers, distribution transformers, UHV circuit breakers, motors and power systems such as STATCOM (a device that stabilizes voltage), HVDC (long-distance direct-current transmission) and ESS (battery storage that holds electricity). This heavy-industry division's 2025 operating margin was about 17%, a high-margin engine responsible for most of the company's profit. The second is the construction division, which builds apartments under its own housing brand. Construction's operating margin is a low ~5%, but it is a stable pillar supporting revenue scale. The company's real growth driver is heavy industry, especially transformers. Its Memphis, Tennessee plant is the only base able to design and produce 765kV-class UHV transformers within the United States, and on this plant it is directly capturing U.S. grid-replacement demand.
The latest close is ₩2,708,000 and the market capitalization is ₩25.3 trillion. The price sits above its 20-day moving average (₩2,607,300) and below its 60-day moving average (₩3,250,817). Short-term and medium-term trends are diverging, so the direction is best read separately. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 48.9, a neutral level. The one-month change is -6.7%, the three-month change is -41.1%, and the position relative to the 52-week high is -41.1%. Relative strength versus the KOSPI is 55 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 55% of all stocks. Over the past three months it lagged the index by 30.0%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Profitability is clearly good. ROE (how much is earned in a year on equity) is 22.1%, above the sector average. The operating margin is 12.5%, but that is a company-wide figure blended with lower-margin construction; the core heavy-industry business alone is about 17%, higher. On the other hand, the financial burden is clear. The debt ratio (debt relative to equity) is 201.5%, meaning debt exceeds equity, and the interest coverage ratio (how many times operating profit can cover interest) is a low 1.35. In other words, profit is strong but interest costs eat considerably into net profit. Enterprise-value measures make this easy to understand. EV/EBIT (enterprise value including debt divided by operating profit, the debt-inclusive version of the P/E) is around 43x. Net debt (total borrowings minus cash) is about ₩247.6 billion, not large relative to market cap, but total borrowings themselves are high, showing up as an interest burden. The FCF yield (actual cash generated relative to market cap) is about 1%, still low, reflecting the growth-phase trait of heavy capital expenditure and working capital. In sum, "excellent margins and ROE, but note the debt and interest burden" are this company's two faces.
The scale of growth is large. In 2025 revenue rose 21.9% year-on-year, and the pace of growth is gradually quickening. The grain of profit is steeper still. In 2025 operating profit grew 106% in a single year and net profit rose 133%. The trend continues into 2026. First-quarter revenue rose 26.2% and operating profit 48.8% year-on-year. That said, net profit in the same quarter fell about 12%. The reason is not that the core business weakened but that tariff-related costs (about ₩17.0 billion) and interest expense weighed on net profit below the operating line. In other words, with the core business strengthening while non-operating items eat into net profit, the P/E calculated on last year's basis can look more expensive than reality. The basis for growth is clear. AI data-center power demand and aging-grid replacement in the U.S. and Middle East are overlapping, leaving UHV transformers in chronic shortage, and this shortage is expected to persist broadly through around 2028. The order backlog is about ₩11.9 trillion, up 34% year-on-year, leaving plenty of work to convert into future revenue. The company plans to invest about ₩230.0 billion more in the Memphis plant to raise UHV-transformer capacity by more than 50% by 2028, so revenue has room to grow further as capacity expands. For this reason this year's profit is on a trajectory to exceed last year's, and with grid investment continuing next year (2027) too, there is weak basis for viewing this year as the profit peak.
Disclosures and company announcements reveal growth and risk together. In February 2026 it signed a roughly ₩787.0 billion contract with a U.S. transmission-grid operator to supply 765kV UHV transformers and reactors. This is the largest single U.S. project ever for a Korean power-equipment company, material that will push up results with high-margin U.S. revenue over the coming years. In April it held an IR to explain the direction of orders and results directly. Conversely, on May 8 it disclosed a serious safety accident; given the nature of manufacturing, safety incidents can lead to operational disruption, cost and reputational risk, and are a point to note. In May there were also disclosures on material management matters relevant to investment judgment and a quarterly report. In sum, a growth event in the form of a large order and risk events in the form of safety and finance coexist in the same period.
Hyosung Heavy Industries is at the center of the large trend of a UHV-transformer shortage. The strengths are clear. It has the only local plant in the United States able to make 765kV transformers, and with a record order and a ₩11.9 trillion backlog it has secured several years of work ahead. ROE of 22% and a 17% operating margin in the heavy-industry division show that this growth is feeding through to profit. The 51x P/E on last year's basis looks high, but given this year's trajectory of further operating-profit growth, the valuation on forward earnings is lower than that. In a growth phase, the "picture on this year's earnings" is closer to reality than the "burden seen through last year's numbers." The cautions are equally distinct. With a debt ratio above 200% and low interest coverage, even when the core business is good, non-operating costs such as interest and tariffs can weigh on net profit so it does not grow as freely as operating profit. On-site risks such as serious safety accidents also persist. In sum, while grid investment and the transformer shortage continue, orders and profit are strong together, but the financial burden and non-operating costs can hold net profit back.
🔎 Valuation vs peers Fairly valued
Compared with domestic power-equipment (transformer, circuit-breaker and power-system) makers: HD Hyundai Electric, LS ELECTRIC, Iljin Electric and Jeryong Electric.
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| HD Hyundai Electric | 37.44x | 13.19x | 37.84% |
| LS ELECTRIC | 105.98x | 14.69x | 16.36% |
| Iljin Electric | 27.04x | 4.66x | 19.39% |
| Jeryong Electric | 12.50x | 3.20x | 22.65% |
On last year's confirmed results the P/E is 51x, not low within the power-equipment peer group. But with profit inflecting upward for this company, it is premature to call it expensive on last year's P/E alone. Operating profit grew 106% in 2025 and 48.8% in the first quarter of 2026, so on this year's earnings the valuation burden is lower than last year's numbers. Against peers its position is in the middle. Its margins and ROE are lower than the most profitable peer, HD Hyundai Electric (P/E 40x, ROE 36%), justifying a correspondingly lower premium, while it is lower than LS ELECTRIC (P/E 105x). With strengths (U.S. orders, the shortage, growth) and weaknesses (high debt, low interest coverage, non-operating costs) in balance, we see the current valuation as a fairly valued level that reflects both growth expectations and the financial burden. For reference, given the nature of the metric, last year's trailing P/E can understate the actual earnings power to the extent net profit is depressed by non-operating costs, so it is appropriate to look at this year's earnings basis alongside it.
Price history Close · MA20 · MA60
The latest close is ₩2,708,000 and the market capitalization is ₩25.3 trillion. The price sits above its 20-day moving average (₩2,607,300) and below its 60-day moving average (₩3,250,817). Short-term and medium-term trends are diverging, so the direction is best read separately. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 48.9, a neutral level. The one-month change is -6.7%, the three-month change is -41.1%, and the position relative to the 52-week high is -41.1%. Relative strength versus the KOSPI is 55 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 55% of all stocks. Over the past three months it lagged the index by 30.0%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M -29.99% / 6M -6.67% / 12M +12.79%
Key metrics Computed vs sector median
Valuation
The P/E of 48.57x is above the sector median (37.44x). The P/B is 10.54x.
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate) Estimate
Model output — not a price target. This is what the formula returns under the assumptions below, not a view on where the share price should go.
DCF (discounted cash flow) estimate — discount rate 6.5%, initial growth 10.0%→terminal 2.0%, 10-yr forecast, free-cash-flow basis, forward earnings power normalized 1.251x. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is 21.2%, in line with the sector average (21.0%). The operating margin is 12.8%. The debt ratio is 222.1%, so the financial structure is somewhat high.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.0B | $3.4B | $4.2B | +21.93% ↑ faster |
| Operating profit | $181.1M | $254.6M | $524.7M | +106.07% ↑ faster |
| Net profit | $81.5M | $156.4M | $365.2M | +133.52% ↑ faster |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $2.2B | $2.5B | $3.0B | $3.4B | $4.2B |
| Operating profit | $84.3M | $100.6M | $181.1M | $254.6M | $524.7M |
| Net profit | $53.8M | $20.5M | $81.5M | $156.4M | $365.2M |
| Revenue CAGR | 4-yr avg 17.85% | ||||
Revenue rose 21.9% year over year (2023 ₩4.3 trillion → 2024 ₩4.9 trillion → 2025 ₩6.0 trillion), and the three-year trend is 'rising'. The pace of growth also quickened from the prior year. Operating profit rose 106.1% year over year. Profit is growing at an accelerating pace. Over the 5 years on record, revenue compound annual growth (CAGR) is 17.8%. The two-year revenue CAGR is 17.8%. In the most recent quarter (Q1 2026), revenue was 26.2% higher than the same period a year earlier.
Latest quarterly results Source Q1 2026 · vs year-ago
Technical indicators Computed
What stands out
- ROE of 21.2% points to solid profitability.
- Revenue grew 21.9% year over year, a sign of growth.
Points to watch
- The figures shown are based on the last annual report as of the writing date, so it is best to review the latest quarterly results and filings alongside them.
Recent news & events searched · sourced
- 2026-02-01UpdateSigned a roughly ₩787.0 billion contract with a U.S. transmission-grid operator to supply 765kV UHV transformers and reactors. The largest single U.S. project ever for a Korean power-equipment company.Medium term, it increases high-margin U.S. revenue and will drive results for years. Positive for Memphis plant utilization and margin improvement. Source
- 2026-05-08UpdateSerious safety accident disclosed. A matter relating to a safety incident at a manufacturing site.Short term, possible operational disruption, cost and reputational risk. A point to watch is whether safety management is strengthened. Source
- 2026-05-11FilingDisclosure of material management matters relevant to investment judgment. A voluntary disclosure informing the market of key business and contract information.Material for confirming the company's key business progress. The short-term impact depends on the disclosure's content. Source
- 2026-05-14EarningsFirst-quarter 2026 report filed. Revenue ₩1.3582 trillion (+26.2% year-on-year), operating profit ₩152.3 billion (+48.8%), net profit ₩91.3 billion (-11.9%).Core-business growth is clear, but net profit fell on non-operating costs such as tariffs and interest. A basis for confirming the diverging direction of operating profit and net profit. Source
- 2026-04-24IRNotice of investor-relations event. The company explains order status and the direction of results directly.A venue to inform investors of the business direction. Communication on earnings visibility after the large order. Source
Figure cross-check computed ↔ external
| Metric | Computed | External | Status | Source |
|---|---|---|---|---|
| 2025 revenue and operating profit | revenue 5₩968.5 billion / operating profit ₩747.0 billion | revenue 5₩968.5 billion / operating profit ₩747.0 billion | Confirmed | link |
| First-quarter 2026 results | revenue 1₩358.2 billion / operating profit ₩152.3 billion / net profit ₩91.3 billion | revenue 1₩358.2 billion(+26.2%) / operating profit ₩152.3 billion(+48.8%) / net profit | Confirmed | link |
| 2026 full-year net profit (own estimate) | approx. ₩650.0 billion(self-estimate) | — | Unverified | link |
Recent filings Source
- 2026-06-02Disclosure
- 2026-06-02Shareholders' meeting notice
- 2026-06-01OwnershipOfficers'/major-shareholders' holdings report
- 2026-05-29Large-business-group status disclosure
- 2026-05-29Corporate governance report
- 2026-05-18Disclosure
- 2026-05-18Shareholders' meeting notice
- 2026-05-14PeriodicQuarterly report
- 2026-05-14Disclosure
- 2026-05-11Disclosure
- 2026-05-08Disclosure
- 2026-04-24Disclosure
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.