CS Wind: Kiwoom Securities Holds Target Price at 76,000 Won, Citing Shifting US Supply Dynamics

CS Wind (KOSPI: 112610), South Korea's leading wind-tower manufacturer, posted operating profit of 86 billion won in the second quarter of 2026, beating market expectations. In a report published on 10th August, Kiwoom Securities reiterated its "buy" rating and target price of 76,000 won.

Solid quarter, but quality of earnings deserves scrutiny

Revenue for the quarter rose 6% year on year to 686.4 billion won, while operating profit surged 45% to 86 billion won, implying an operating margin of 12.5%. The result exceeded both Kiwoom's own estimate of 82 billion won and the broader market consensus of 78.7 billion won.

Two factors drove the improvement. First, operating profit from the tower division rose by roughly 20 billion won compared with the same period a year earlier. Second, the substructure subsidiary recognised a concentrated incentive payment: the unit posted an operating margin of 31.2% for the quarter, with approximately 17 billion won in incentives booked. Strip out the 30.9 billion won in American Manufacturing Production Credits (AMPC)—a US federal subsidy for domestic clean-energy manufacturing—and the tower division's underlying operating margin falls to the low single digits, around 3%. The culprit is a growing share of orders from new customers whose production requirements impose heavier processing burdens on CS Wind's American facilities.

The results nonetheless mark two consecutive quarters of recovery: operating profit of 74 billion won in the first quarter was followed by 86 billion won in the second. For context, full-year 2025 operating profit of 320.3 billion won represented a 25% increase on the prior year, yet quarterly momentum had decelerated to 70 billion won by the fourth quarter. Whether the tower division can sustain genuine underlying margin recovery—rather than relying on one-off incentive income—will be the defining question for the second half.

Kiwoom Securities expects a further productivity boost from August, as experienced workers from other CS Wind subsidiaries join the American operation. The brokerage forecasts that expanded production volumes and improving margins at the US tower unit will drive group-wide earnings growth from the second half of 2026 through 2027.

Demand outlook brightens

The outlook for American onshore wind has also improved markedly. Energy consultancy Wood Mackenzie raised its cumulative US onshore wind installation forecast for 2028–2030 by roughly 30%, or 6.9 GW, in its July 2026 update compared with the prior quarter. Compared with its April 2026 projections, annual installation forecasts for 2028, 2029, and 2030 were revised upwards from 8.1 GW, 8.1 GW, and 7.3 GW to 10.1 GW, 10.1 GW, and 10.2 GW respectively. Notably, this upgrade was made without any change to renewable energy tax-credit policy, suggesting the demand revision reflects genuine underlying momentum rather than a policy windfall.

One structural driver is the repowering of ageing wind farms. Installations with more than 15 years of service life are estimated to reach approximately 81 GW by 2035, creating a growing replacement market that will only expand as time passes.

Competition thins on the supply side

Supply-side developments are equally favourable for CS Wind. American rival Broadwind exited the tower business entirely in May of this year. Arcosa has converted two of its four tower factories to power-infrastructure uses, halving its tower production capacity. As a result, total US tower manufacturing capacity is expected to shrink from roughly 10 GW to somewhere between 7 and 8 GW.

This shift in the competitive landscape could prove highly advantageous. When demand is rising at the same moment that competitors are retreating, the survivors tend to capture a disproportionate share of the gains. CS Wind retains the largest tower production footprint among remaining US manufacturers, which should strengthen its pricing power in contract negotiations should a prolonged supply shortage materialise.

Risks remain

Investors should nonetheless weigh several risks carefully. The company's dependence on AMPC subsidies remains substantial: at 30.9 billion won, AMPC accounted for 36% of second-quarter operating profit of 86 billion won. Any policy shift unfavourable to renewable energy in the United States could reduce AMPC receipts and introduce meaningful earnings volatility.

The substructure incentives are also a fading tailwind. They are expected to be recognised mainly in the second and third quarters before dropping sharply in the fourth. Kiwoom estimates substructure operating profit will fall to just 5 billion won in the fourth quarter, a decline of more than 85% from the 34 billion won booked in the second quarter.

Valuation remains undemanding

At 43,850 won per share (as of 7th August), the stock trades at a discount of roughly 73% to the target price. Its 12-month forward price-to-earnings ratio stands at approximately 10.3 times—a significant discount to global wind-turbine peers Vestas (21.2 times) and Nordex (20.0 times). Kiwoom forecasts net profit of 181.4 billion won for full-year 2026, rising to 221.5 billion won in 2027. The price-to-book ratio of 1.42 times on a 2026 basis is close to historical lows.

On revenue, Kiwoom projects 2.743 trillion won in 2026, growing to 3.156 trillion won in 2027. The net debt-to-equity ratio is expected to fall rapidly, from 60.4% in 2025 to 36.0% in 2026 and 14.5% in 2027, pointing to a meaningfully stronger balance sheet over the medium term.