Among the four Korean companies selling equipment into the global grid build-out, LS ELECTRIC CO., LTD (KRX:010120) is growing fastest.
Second-quarter revenue rose 32.2% year on year. HD Hyundai Electric grew 26.0%, Hyosung Heavy Industries 10.6%, and Doosan Enerbility 3.4%. Across the first half LS ELECTRIC's revenue was up 32.7%, to ₩2,953.5bn, with operating income up 55.7% to ₩305.1bn and an operating margin of 10.33%, the best in the company's recorded history.
It is also the only one of the four whose operations consumed cash in the period.
Cash from operating activities in the first half of 2026 was negative ₩82.0bn. In the first half of 2025 it was positive ₩220.9bn. A swing of ₩302.9bn, in a period when operating income grew by ₩109.2bn.
That combination, rising profit and falling cash, has one general explanation and this company shows it clearly.
Trade receivables were ₩1,404.9bn at June 30, against ₩931.8bn a year earlier. Up 50.8%, while second-quarter revenue grew 32.2%. Against the December 31 balance of ₩982.5bn they are up 43.0% in six months.
Inventories were ₩735.0bn against ₩516.9bn a year earlier, up 42.2%, and up 32.9% since December.
Both lines growing faster than sales means the company is producing and shipping ahead of collection. For six months that is what a fast-growing manufacturer looks like. Sustained, it is the thing that turns a growth story into a financing problem.
Where the money came from is visible in the liabilities.
Total liabilities went from ₩2,815.4bn at December 31 to ₩3,785.9bn at June 30, an increase of ₩970.5bn in six months. Current liabilities alone rose from ₩1,864.7bn to ₩2,881.6bn, up 54.5%.
Total equity over the same period rose only ₩58.3bn, from ₩2,141.3bn to ₩2,199.6bn, because ₩234.8bn of net income was largely offset by ₩103.3bn of negative other comprehensive income and ₩92.6bn of dividends.
So the liabilities-to-equity ratio moved from 1.31 times to 1.72 times in half a year. Cash fell from ₩762.7bn to ₩672.4bn.
None of that is dangerous at this scale. It is a change in the character of the balance sheet, from one funding itself to one being funded, and it happened quickly.
The comparison across the four Korean grid names is unflattering on one axis and flattering on another.
Second-quarter operating margins: HD Hyundai Electric 25.14%, Hyosung Heavy 15.67%, LS ELECTRIC 11.32%, Doosan Enerbility 6.65%.
That ordering is not about management quality. It is about position in the voltage chain. HD Hyundai Electric makes ultra-high-voltage transformers, where perhaps half a dozen companies worldwide can compete and the shortage translates directly into price. LS ELECTRIC makes medium and low-voltage switchgear and distribution equipment, where Schneider, ABB, Siemens and Eaton all compete capably. The same demand reaches it as volume rather than pricing power.
Now the valuation. At the August 27 close of ₩219,500, up 8.93% on the day, across 150,000,000 shares, LS ELECTRIC is capitalised at ₩32.93tn against ₩2,199.6bn of equity. That is 15.0 times book.
HD Hyundai Electric trades at 13.1 times book, Hyosung Heavy at 10.5, Doosan Enerbility at 4.3. LS ELECTRIC is the most expensive of the four on book value, with the third-best margin and the only negative operating cash flow.
On earnings it is 70.1 times annualised first-half net income, against 35.8 times at HD Hyundai Electric and 54.6 at Hyosung Heavy.
Two arguments push back, and neither is weak.
The first is that working capital is what growth costs. A company adding a third to its revenue base has to build inventory and extend credit before it collects, and the effect is arithmetically largest in the periods when growth is fastest. If revenue growth moderates to the high teens, receivables and inventory stop absorbing cash and the operating cash line snaps back. This company generated ₩299.9bn of operating cash in FY2025 and ₩230.1bn in FY2024, so it is capable of it.
The second is that a low margin on a fast-growing base can be worth more than a high margin on a slow one. If LS ELECTRIC's revenue keeps compounding at 30% while HD Hyundai Electric's grows in the teens, the gap in profit pools closes even with a permanently lower margin. Volume growth also brings operating leverage, and the operating margin has already gone from 5.55% in FY2022 to 10.33% in the current half.
The counter is that 15 times book is a price that requires both to happen: sustained volume growth and continued margin expansion, funded from a balance sheet that has just levered up to pay for six months of it.
The receivables balance at September 30, reported in late October. If it flattens while revenue holds, the first half was the working capital cost of a step change in volume and it has been paid. If it grows another 20% against slower revenue growth, the company is extending more credit to win the business, and the quality of the growth changes.
The second marker is full-year operating cash flow, reported early next year. FY2025 delivered ₩299.9bn. A figure near or below zero for FY2026, after a year in which operating income will likely exceed ₩600bn, would mean the cash conversion problem is structural rather than seasonal, and at 15 times book that is not something the price allows for.
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