Q4 Semiconductor Fate?… September Stock Market and Power/Bio-pharmaceutical Outlook

On the first trading day of September, the domestic stock market started with a slight decline, contrary to expectations of a rebound in memory semiconductor stocks like SanDisk, but gradually gained upward momentum due to trading volume. Deputy Head Lee Jae-chan emphasized that given the possibility of U.S. interest rate hikes and concerns about an economic slowdown, it is crucial to focus on sectors that can maintain an upward trend. He added that there were instances where the KOSPI market successfully turned positive at the end of trading the previous day, suggesting that positive signals can be found even amidst uncertainty.

In a recent seminar, the areas that attracted the most investor interest were the power equipment and bio-pharmaceutical sectors. The semiconductor sector already had deep investor understanding, so there were no particular questions, but many questions arose regarding the power equipment sector mentioned in the August 18 broadcast and the bio-pharmaceutical sector presented by Commissioner Kim Seon-ho. In particular, questions about the overvaluation controversy of the power equipment sector and investment trends in the bio-pharmaceutical field were prominent.

On August 28, the Trump administration declared a national emergency for power, prohibiting the import of power system-related equipment from sanctioned countries like China and North Korea. However, in the U.S. utility market, Chinese companies have secured some orders by offering faster delivery. In this situation, domestic companies are securing competitiveness with strengths in the ultra-high voltage transformer market and are moving to expand production lines to meet U.S. market demands.

The power equipment industry is characterized by long lead times and significant time required for facility expansion. It takes more than a year to train skilled personnel to wind copper coils, and over two years to expand production capacity. Recently, with the surge in demand for data centers, supply pressure has been gradually intensifying, starting from 154kV high-voltage systems. These structural factors are contributing to the prolonged shortage of power equipment.

The power equipment sector is demonstrating its growth through robust performance indicators. Earnings per share (EPS) growth is steadily maintained, and production capacity expansion is also progressing normally. Furthermore, the backlog of grid connection waiting volumes, mentioned as a leading indicator in the previous broadcast, is also accumulating well, supporting the positive outlook for the power equipment sector.

The current power equipment shortage is intensifying to an unprecedented level. With power demand expected to exceed 1,000GW by 2030, combined with existing backlogs of voltage awaiting connection, the tightness in supply and demand is becoming even more pronounced. As the Trump administration has recognized the severity of this power issue and declared a national emergency, related policies are expected to be vigorously implemented. This serves as a key basis for the long-term positive outlook for the power equipment sector.

Individual investors' focus on the domestic bio-pharmaceutical sector is primarily on technology transfer, as it serves as a crucial catalyst for immediately boosting stock prices. Investors critically evaluate the technological capabilities of individual companies and their potential for technology transfer, making such transfers a key point of connection between investors and stocks. Therefore, when investing in the bio-pharmaceutical sector, a strategy centered on companies with high potential for technology transfer is effective.