HD Hyundai Electric: 2Q26 key trends largely in line; data center orders a bright spot

Research evidence excerpt

HD Hyundai Electric: 2Q26 key trends largely in line; data center orders a bright spot

Stephen Tsui, CFA AC Asia Pacific Equity Research

(852) 2800-8592 28 July 2026 J P M O R G A N

stephen.tsui@jpmorgan.com

• Operating margin edged up by ~20bps qoq to 25.1%, in line with our estimates.

Management attributed the only slight expansion in qoq margin to higher revenue from

the ESS project (W20bn in 2Q) that carried a lower operating margin than other products.

Also, lower power revenue qoq affected the degree of sequential margin expansion.

Management mentioned during the earnings call that prices of US power equipment have

been on the rise YTD, and margins in 2Q for new orders were higher than 1Q on the back

of price hikes and a more favorable product mix (e.g., a higher order from 765kV qoq).

• Middle East revenue dropped by 25% yoy to W130bn, which was a function of a

decline in GIS revenue due to delivery schedules. Management’s revenue recognition

could gradually normalize in the coming quarters and the Middle East portfolio could still

grow in the medium term (while there are quarterly fluctuations). New orders dropped

by 37% qoq to US$104mn, which was a function of the delay in Saudi’s HVDC project.

While management has shifted its focus from the Middle East to the EU market, it is still

confident about its competitiveness in the Middle East market, given its long presence

there, and believes it will continue to play a role in the contract awards for Phase 2 and

3 of the Saudi HVDC projects.

• The Europe market remained a bright spot with orders and sales growing 17%/59%

yoy to ~US$130mn and W110bn, respectively, and management attributed the strength

to expanding investments in Europe by US hyperscalers, and transformer profitability

continued to improve.