LSIS CEO Koo Ja-kyun

By Kim Yoo-chul

LSIS, a leading local provider of electric power and automation equipment, has suffered a minor setback in China with decreased electricity-related orders.

But the company and market analysts expect the China business to see a gradual recovery throughout this year.

``No drastic improvements are expected in our China business in the second quarter, however, LSIS’s bottom line will strengthen thanks to rising power cable orders from Iraq,’’ said LSIS spokesman Kim Bong-kyu, Monday.

In the first quarter, LSIS reported 33.1 billion won in operating profit, a drop of 7.7 percent year-on-year on a consolidated basis, an international accounting measurement that includes all of the company’s overseas performances.

Chun Young-ki, an analyst at Hyundai Securities, said the rather sluggish first quarter performance was largely due to a smaller contribution by LSIS’s Chinese affiliates.

LSIS’s affiliate in Dalian reported an operating loss of some 800 million won in the first three months of the year, while another affiliate in Hubei, central China, also reported around a 300 million won operating loss during the same period, according to officials.

The two Chinese affiliates were operating high-voltage transmission system businesses. ``The Korean company had so far enjoyed steady corporate growth in China. But rising costs in materials and decreased electricity-related orders from the Chinese government hurt LSIS in the first quarter,’’ said an industry official, asking not to be named.

Kim declined to comment more, citing the sensitivity of the issue but Sung Ki-jong, an analyst at Daewoo Securities, forecasts LSIS’s profit curve will be steeper from the second quarter.

``LSIS has won contracts to build 70 power substations in Iraq and that will help the company. Revenue from electric system-related projects will soar to 150 billion won in the second quarter from 65.8 billion won in the first,’’ said Kim Ji-san, a senior analyst at Kium Securities.