2026.10.13Issue #306

Transformer Exports Hit Records, but Stocks Diverge

Exports rose 6.7% while orders jumped 51%, illustrating why trade figures and corporate earnings move at fundamentally different speeds.

Business

Oswarld (Kwangseob Ahn)· Writer & editor of INLEVEL9

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On July 19, headlines reported that South Korea’s exports of ultra-high-voltage (UHV) transformers reached $701.52 million in the first half of the year. According to Korea Customs Service trade statistics, it was the first time since records began that first-half shipments crossed ₩1 trillion (~$720 million). Naturally, the coverage leaned heavily on words like “all-time high.”

Yet buried in the very same reports was a growth rate of just 6.7%. By comparison, Korea International Trade Association data showed full-year UHV transformer exports last year reached $1,298.98 million—a roughly 37% jump from $946.25 million in 2024. New records are still being set, but the pace of record-breaking has slowed down considerably.

About ten days later, second-quarter corporate earnings painted an entirely different picture of momentum. Hyosung Heavy Industries saw new Q2 orders surge 51% year-on-year, while operating profit climbed 60.9% to an all-time quarterly high. HD Hyundai Electric posted a 26% revenue increase and a 37.3% rise in operating profit.

Exports up 6.7%, revenue up 26%, orders up 51%. All three figures point to a “transformer boom,” yet each advances at its own cadence. None of them is wrong. They simply measure different things at different points in time.

Unpacking this disconnect matters for one simple reason. When headlines blare about “record-shattering exports,” investors instinctively jump to the question: “Which stock should I buy?” This letter will not answer that question with a ticker symbol. Instead, we will examine what customs tallies, corporate earnings, and US tariff determinations actually measure—and when.

This letter does not constitute a recommendation to buy or sell any security. All investment decisions should be based on official regulatory filings and your own independent judgment.

What Export Statistics Count—and What They Don’t

The “ultra-high-voltage transformers” cited in media reports typically refer to liquid dielectric transformers with a capacity exceeding 10,000 kVA, or 10 MVA¹. In the international Harmonized System (HS code²) classification for traded goods, this category falls under 8504.23. Before reading this aggregate figure as a stock signal, several structural quirks are worth understanding.

First, customs data does not differentiate between companies. Shipments from HD Hyundai Electric, Hyosung Heavy Industries, LS Electric, and Iljin Electric are lumped into a single headline number. If one player logs explosive growth while another slumps, the aggregate total obscures the shift entirely. Destination mixes shift constantly as well. The share of large power transformers bound for the United States jumped from 28% in 2022 to 43% in 2024, and surpassed 60% through October 2025. Even when two years share the label “record high,” the underlying geographic exposure looks completely different.

Second, the figures track only goods manufactured in South Korea that clear domestic customs. HD Hyundai Electric operates a transformer plant in Montgomery, Alabama, opened in 2011, while Hyosung Heavy Industries continues to expand its Memphis, Tennessee facility acquired in 2020. Transformers built in American factories and delivered directly to US utilities show up on corporate income statements, but they never touch Korean export statistics. The more both companies ramp up local manufacturing, the further corporate earnings and export statistics will diverge.

Finally, the numbers themselves are often revised retrospectively. In reporting from July of last year, first-half 2025 UHV transformer exports were pegged at $664.20 million. Yet in this July’s coverage, the baseline figure used for the first half of 2025 was adjusted to $657.49 million. Whether the revision reflects official statistical updates or slight differences in newsroom baselines requires checking the raw source data. It also means that a headline growth rate of 6.7% can shift by several decimal places depending on which comparative baseline is applied.

A Company’s Books Move Only When the Ship Arrives

Export statistics tick up the moment goods leave Korea. A company’s revenue, however, is recognized only when contractual conditions are met—which, in most cases, means upon delivery to the customer. Extra-high-voltage (EHV) transformers are custom-built to order, loaded onto cargo ships, and installed on-site, a process that takes considerable time. If quarters turn in between, the export is logged in this quarter, while revenue lands in the next.

The 1st quarter of this year was a case in point. HD Hyundai Electric’s Q1 revenue grew just 2.1% year-on-year, with both revenue and operating profit slightly missing market consensus. Eugene Investment & Securities pointed to delayed delivery timelines for certain Middle Eastern projects where revenue is recognized upon delivery. The brokerage noted that quarterly earnings are likely to become lumpier going forward, swinging with delivery schedules tied to specific clients and projects.

Hyosung Heavy Industries faced a similar situation. At the end of Q1, certain high-margin products destined for the US—such as circuit breakers—were caught in transit as inventory, delaying revenue recognition. IBK Securities estimated this delayed volume at around ₩100 billion (~$72 million) in revenue and roughly ₩40 billion in operating profit, projecting it would roll into Q2. In the event, Q2 operating profit reached a record quarterly high of ₩264.3 billion, yet still fell short of IBK’s estimate of ₩324.5 billion. It was a results release stamped simultaneously with “all-time record” and “missed expectations.”

Order intake operates on an even longer horizon. At the end of Q2, order backlog³ stood at $8.49 billion for HD Hyundai Electric and ₩17.5 trillion for Hyosung Heavy Industries’ heavy equipment division. This backlogged work does not convert into revenue all at once. According to Daishin Securities, a ₩787.1 billion supply contract that Hyosung Heavy Industries signed this year with a US transmission grid operator runs from February 2026 through January 2031. An order announced today will be parsed out into exports and recognized revenue over the next 5 years. Put conversely, the export statistics logged this month may well represent contracts secured 2 to 3 years ago.

So even within the same boom, an order is recorded on the signing date, an export when the ship departs, and revenue when the customer takes delivery. That is why export figures alone make a treacherous guide for forecasting next-quarter earnings.

Which Company Shows Up When You Search “Hyosung Stock”?

Corporate names warrant a double check as well. The listed company manufacturing transformers is Hyosung Heavy Industries. Yet there is a separate holding company listed simply under the name “Hyosung.”

On the very same day, July 31, the holding company Hyosung also reported its Q2 results. Operating profit jumped 133.7% year-on-year to ₩231.6 billion, driven by stronger performances across subsidiaries such as Hyosung TNC, Hyosung Heavy Industries, and Hyosung Chemical, which boosted equity-method⁴ gains. Hyosung TNC benefited from higher spandex selling prices, while Hyosung Chemical swung back to profitability. In short, the holding company Hyosung’s earnings bundle the fortunes of textiles and chemicals alongside transformers. Checking whether the company name cited in the news matches the ticker you are actually trading must always come first.

The Same Tariff, Different Rates by Company

Another reality aggregate export figures hide is the diverging conditions each company faces. Antidumping duties from the US Department of Commerce are a prime case in point.

The US has imposed antidumping duties on Korean-made large power transformers since 2012. The scope covers liquid dielectric transformers with a capacity of 60MVA or higher. Because this differs from the threshold used in export statistics (over 10MVA), not every unit captured in aggregate trade data is subject to these tariffs.

The Commerce Department conducts an annual administrative review⁵ to recalculate these tariff rates each year. In the review covering shipments entered between August 2023 and July 2024, the department issued preliminary results this February and published its final determination in the Federal Register on August 14. HD Hyundai Electric and Iljin Electric, both subject to direct mandatory review, received 0%. Hyosung Heavy Industries and LS Electric, which were not selected for individual examination, were assigned 4.32%. The Commerce Department explained that this rate reflects the dumping practices of the two companies. The new cash deposit rate applies to shipments entering on or after the Federal Register publication date.

Hyosung Heavy Industries and LS Electric appealed the ruling, filing lawsuits with the US Court of International Trade. Both companies describe this as a routine legal remedy.

What matters here is the timing. A determination published in August 2026 sets the final duties on shipments entered in 2023~2024. And that very same ruling divides the industry, handing 0% to some companies and 4.32% to others. Headlines touting booming export figures for the broader sector render these crucial disparities entirely invisible.

How Old Is the “70% Are Aging” Figure?

Almost every article on transformers includes a familiar talking point: roughly 70% of transformers across the United States are due for replacement. Trace that back to its source, however, and you find a report on large power transformers published by the US Department of Energy (DOE) in 2012 and updated in 2014. That report estimated that the average age of large power transformers installed in the US was 38~40 years, with 70% being 25 years or older.

That does not mean replacement demand is absent. But this figure is an estimate from more than 10 years ago, and it applies strictly to large power transformers deployed across transmission grids. Broadening that claim to cover “all US transformers” stretches the scope too far.

More recent data focuses on entirely different categories of equipment. In a 2024 report, the National Renewable Energy Laboratory (NREL) estimated that distribution transformer capacity might need to grow by 160~260% by 2050 compared to 2021 levels, driven primarily by replacing aging units and electrification. Yet distribution transformers—the units mounted on utility poles or ground pads that step down voltage at the final delivery stage—belong to a completely different market from the ultra-high voltage transformers highlighted in South Korea’s export statistics. On the power transformer front, research firm Wood Mackenzie estimates that US demand has grown 116% since 2019.

Because multiple institutions use distinct methodologies to point toward growing demand, the broader trajectory itself is backed by evidence. Even so, whenever a forecast claiming “the boom will last” is hitched to a single figure, it pays to check how old that number is—and precisely which transformers it refers to.

What to Look at Separately

Export statistics reveal the industry’s broader tide, and multiple data points confirm that this tide is running strong. But to gauge any specific company’s next quarter, you have to open its individual regulatory filings.

transformer export stock gap

Quarterly reports show how geographic revenue breakdowns and order backlogs are evolving, as well as when the firm recognizes revenue. According to an analysis by Korea Investment & Securities, the US share of Hyosung Heavy Industries’ heavy industry division rose from 23% to 38% in the span of 1 year. Figures like these are far closer to the company’s actual profitability than aggregate export totals. Moreover, as output from its US factory increases, the business decouples further from Korea’s customs data. Company-specific conditions, such as anti-dumping administrative reviews, must also be monitored individually.

Viewed this way, “record-high exports” is less a buy signal than a starting point for checking each company’s individual numbers.

Oswarld’s Lens

While gathering material for this issue, what struck me was that many of those explaining the boom are simultaneously pitching something tied to it. Brokerage reports raise target prices, and asset managers close out earnings breakdowns by introducing related ETFs. I am not saying their analysis is wrong. But when the word “supercycle” appears across news articles, analyst reports, and product prospectuses alike, it is worth asking whether the timeframe that word describes aligns with the holding period of the products being sold on its back.

An order contract spans 5 years, yet equities can swing by several percent in a single day. Recognizing that the industry’s clock runs on a different timeframe from the investor’s clock helps keep you from growing impatient over claims of “all-time highs.”

Closing

A variety of numbers confirm that transformers are selling briskly. But each of those metrics tracks a different scope across different dates. The next time you see an “all-time high” headline, checking just one line is more than enough: who counted what, and when.

💬 Have you ever looked up related stocks after seeing an “all-time high” headline, Reader? Leave a comment and let me know what number you checked first.

📨 If you know anyone looking into transformer stocks, please share this piece with them.

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References & Further Reading

The author is Oswarld (Kwangseob Ahn). Current roles: Adjunct Professor at Sejong University, Strategy Consultant at INLEVEL9. Career, research, books, and recent work are kept current on the About page. Latest · July 2026: HEMA-2: A Consolidation-Aware Tri-Memory Architecture with Multi-Channel Scheduling for Lifelong Conversational AI.

📝 Glossary

Footnotes

MVA (Megavolt-Ampere): A unit of apparent power indicating the capacity a transformer can handle. 1 MVA equals 1,000 kVA. ↩
HS Code (Harmonized System Code): An international standardized numerical classification for traded goods administered by the World Customs Organization (WCO). The first 6 digits are uniform globally, serving as the baseline for comparing trade statistics across countries. ↩
Order backlog: The cumulative value of contracted business that has been booked but not yet recognized as revenue. ↩
Equity method: An accounting technique used to reflect an investor’s proportionate share of an investee’s net profit directly in its own financial statements. ↩
Antidumping annual administrative review: A periodic U.S. Department of Commerce proceeding that recalculates applicable antidumping duty rates based on transactions during the preceding 1-year period. ↩