LS Electric issues public bonds again after 8 months: 'fundraising confidence' amid power equipment boom

[Korea Financial Times, Shin Haeju] LS Electric (CEOs Koo Ja-kyun, Chae Dae-seok) will issue corporate bonds at the end of this month. This marks the second public bond challenge in eight months following February.

LS Electric will issue KRW 150 billion worth of corporate bonds on the 31st. The company plans to use 3-year bonds worth KRW 70 billion and 5-year bonds worth KRW 80 billion for debt repayment and raw material purchases respectively. Demand forecasting targeting institutional investors will be conducted on the 24th.

LS Electric disappeared from the public bond market after 1995, returning after 28 years in 2023. The company issued bonds once last year and issued KRW 210 billion worth of corporate bonds in February this year. Including this latest issuance, total bond issuance this year amounts to KRW 360 billion, the largest since resuming public offerings in 2023. The February issuance saw funds amounting to five times the offering amount pour in, marking a successful reception.
LS Electric's credit rating is 'AA- (positive)', with NICE Credit Rating and Korea Ratings Corporation maintaining existing ratings.

Performance continues steady growth. Operating profit increased 73.28 percent from KRW 187.5 billion in 2022 to KRW 324.9 billion in 2023. Last year recorded KRW 387.9 billion, up 19.39 percent year-on-year.

According to FnGuide consensus (securities firm performance forecasts), third-quarter sales this year are projected to reach KRW 1.217 trillion, up 19.17 percent year-on-year, and operating profit is expected to achieve KRW 112 billion, up 68.59 percent.

Interest coverage ratio also remains stable. It recorded 9.2 times in 2022, 7.7 times in 2023, and 8.9 times in 2024, and also recorded 7.2 times in the first half of this year. When the interest coverage ratio exceeds 1, it signifies the company generates profit even after bearing interest expenses.

Financial health is also sound. Though the debt ratio increased from 89.81 percent in 2021 to 114.47 percent in 2022, 116.52 percent in 2023, and 137.30 percent in 2024, it remains at a low level compared to the industry. Last year, HD Hyundai Electric recorded 151.78 percent and Hyosung Heavy Industries recorded 202.53 percent.

Order backlog as of end-June this year stands at KRW 3.7 trillion, of which high-profit products such as switchboards and extra-high voltage transformers account for KRW 2.7 trillion. LS Electric recently began joint development with global industrial automation solution company Honeywell on data power management solutions and battery energy storage systems (BESS) targeting the North American market. Next month, the company also plans to complete expansion of its Busan extra-high voltage transformer production facility.

Shin Haeju (hjs0509@fntimes.com)