Regional Industry Focus Electric Equipment (Overweight) Refer to important disclosures at the end of this report DBS Group Research . Equity 22 Aug 2018 Opportunities for ESS market and KOSPI: 2,247.9 electric equipment players KOSDAQ: 769.8 Korea’s ESS market saw 20-fold growth in 1H18 Analyst Regional Research Team Further growth to be spurred by PV-based ESS
[email protected] Eyes on PCS manufacturers in ESS value chain Top pick Top pick: LS Industrial Systems 12-mth Company Price Rating Mkt Cap Target 20 Aug (KRW bn) Price Renewable energy-connected ESS to drive ESS market growth. (KRW) In 1H18, Korea’s energy storage system (ESS) market grew 20- (KRW) fold y-o-y to 1.8GWh (1.13GWh for peak-load shifting or peak- LS Industrial 71,300 2,139 90,000 BUY cut ESS, 0.68GWh for renewable energy source (RES)-connected Systems (010120 KS) ESS). We estimate new ESS capacity to be 0.75GWh (0.34GWh for peak-cut, 0.41GWh for RES-connected) in 2H18 and to reach Our coverage / companies on our radar 2.56GWh in 2018 (+333% y-o-y). With most discount benefits Hyundai Electric regarding ESS set to be rolled back in 2021, peak-cut ESS & Energy System 64,900 662 77,000 BUY demand is likely to decline going forward. However, the RES- (267260 KS) connected ESS market should see growth, driven by photovoltaic RS Automation (PV)-connected ESS. For 2018, supply of PV-connected ESS is 14,150 129 N/A Not rated estimated at 1.1GWh representing 43% of total new ESS (140670 KS) installations.