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Photo courtesy of CS Wind. |
[Alpha Biz= Paul Lee] Meritz Securities maintained a "Buy" rating for CS Wind, while lowering its target price from KRW 71,000 to KRW 64,000. This represents a potential upside of 56.7%, with the stock closing at KRW 40,850 the previous day. Despite an expected challenge in revenue growth this year, profitability is forecast to improve due to increased pricing for offshore wind substructures. Additionally, the stock is projected to rebound if policy uncertainties in the U.S. are resolved.
Meritz Securities reported that CS Wind’s consolidated operating profit for the fourth quarter of last year was KRW 46.3 billion, marking a turnaround from a loss a year earlier. However, the result fell short of the market consensus of KRW 72.5 billion.
The shortfall was attributed to a one-off cost of approximately KRW 20 billion in the offshore wind substructure segment and the delayed revenue recognition of certain tower projects initially scheduled for the fourth quarter, which were pushed to January this year.
For 2024, Meritz Securities projected CS Wind’s annual revenue to decrease by 0.6% year-on-year to KRW 3.05 trillion, while operating profit is expected to rise by 16.9% to KRW 321.9 billion. Although revenue from offshore wind substructures is expected to decline due to a lack of new orders late last year, growth in the tower segment is anticipated to offset this. Profitability is likely to improve as price adjustments for substructure contracts take effect in the first and third quarters.
Meritz Securities noted, “Concerns over declining earnings in 2025 have been alleviated by the price increase for substructures. Additionally, clients have shown a clear trend of profitability improvement since the second half of last year. If policy uncertainties are resolved, a stock price rebound is highly probable.”
The securities firm also cited key catalysts for a potential stock price increase, including the clarification of amendments to the Advanced Manufacturing Production Credit (AMPC) policy in the U.S. and interest rate cuts.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
