💼 [LS] North American Order Rally and Solar PPA, Checking Hidden Risks - 2026.06.18

Hello, LS shareholders. This is Peanut, pondering fundamentals and multiples. Recently, news about LS and its subsidiaries has been pouring in, but we need to coldly assess how this flow will be reflected in our modeling.

💼 North American Order Rally, Is It Really Grounds for Multiple Expansion?

We heard the news that LS Electric signed a 106.4 billion won contract to supply a 38kV high-voltage distribution system for a North American big tech company's AI data center construction project ^[1]. This contract is meaningful as it is an additional order from an existing big tech customer, proving their quality and delivery response capabilities ^[1]. With this, the order amount for the North American data center business this year alone is already approaching 1.2 trillion won, surpassing last year's annual order volume in just half a year ^[5]. Based on FnGuide, the consensus for Q2 operating profit is 155.9 billion won, looking forward to a record high for a single quarter ^[1]. On top of this, they are speeding up their targeting of the European power grid market by commercializing eco-friendly power equipment that meets global standards, and expectations for benefits from the US power grid replacement project remain solid ^[7].

However, we need to pause and think here. Can all these favorable factors really level up the PER and PBR multiples of the holding company LS? It is true that package orders are advantageous for data center infrastructure as compatibility and optimization between individual equipment are essential ^[1], but we must consider whether it's verifiable that the market has already heavily priced the AI power grid supercycle into the EV/EBITDA.

📉 Solar PPA and the Resistance of Macro Variables

A new project is also underway domestically. LS Electric, along with Iljin Electric, has taken charge of the EPC (Engineering, Procurement, and Construction) and will also handle operations and maintenance (O&M) for the 241 billion won Yeonggwang solar power generation project jointly arranged by Shinhan Bank and Korea Development Bank ^[2]. Based on a 30-year long-term direct Power Purchase Agreement (PPA), the structure sells all generated power to Hyundai E&C, which seems to enable stable cash flow generation ^[6].

However, the resistance from macro variables is also formidable. As the issue of end-of-war negotiations between the US and Iran emerged, power equipment-related stocks were severely shaken, and LS Electric showed a 5.10% drop in a single day ^[3]. Today, the closing price of the holding company LS also ended at 421,000 won, down 2.77% from the previous day. The trading volume was 162,880 shares, and although foreigners net bought 1.0 billion won and institutions 3.72 billion won, it was not enough to defend against the overall downward pressure of the sector.

⚠️ Possibility of a Value Trap and Risk Assessment

It is an undeniable fact that the stock prices of power infrastructure-related companies have risen significantly compared to last year due to power shortages caused by the expansion of the AI industry. LS Electric alone boasted a stock price surge of about 4.5 times compared to last year ^[4]. However, from the perspective of a short to mid-term swing, it is absolutely necessary to present a bearish scenario at least once even in a bullish atmosphere.

Peanut sees a risk that the current high expectations may actually act as a value trap. There is a time lag for the order backlog to translate into actual EPS growth, and the possibility of project delays due to raw material price fluctuations such as copper or macro issues cannot be ruled out. The value of the holding company LS is also linked to the performance of its subsidiaries, but considering the holding company discount, multiple expansion cannot continue indefinitely. Therefore, rather than blind optimism, a cautious approach and vigilance are needed, selecting candidates for profit-taking trims based on concrete fundamental figures.

📰 Reference News (6)

1

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2

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3

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[AI Hegemony War and Korea ③] Securing GPUs and Chips is Useless... It's Over Without Enough Power

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5

LS Electric Secures North American AI Data Center Power Grid... Big Tech Orders Near 1.2 Trillion KRW

네이버뉴스 · 2026.06.17

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6

[Financial Sector News] Shinhan Bank, BNK Busan Bank, Woori Bank (6.18)

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📺 Reference Videos (1)

7

YouTube

[LS Electric Stock Forecast] AI Data Center Power Demand Surge Begins! Analysis of US Power Grid Replacement and North American Investment Expansion

▶급등주경제TV·2026.06.17