[Click eStock] "Hyundai Construction Equipment, Overseas Sales Decline... Target Price Down"

[Asia Economy Reporter Minji Lee] KB Securities maintained a buy rating on Hyundai Construction Equipment on the 5th, stating that both the fourth-quarter sales and operating profit were lower than market expectations, and set a target price of 32,000 KRW, which is 11% lower than the previous target.

Hyundai Construction Equipment recorded sales of 574.1 billion KRW and an operating profit of 6.9 billion KRW in the fourth quarter of last year, down 14% and 80% respectively compared to the same period last year. Non-operating losses also resulted in a large deficit due to impairment losses related to development costs (27 billion KRW) in addition to financial expenses and foreign exchange gains and losses.

Jung Dong-ik, a researcher at KB Securities, said, "The poor performance in India, North America, and direct export regions is the direct cause of the earnings decline," adding, "Sales in India were halved compared to the previous year due to the rainy season and delays in government policies leading to decreased sales." Fourth-quarter sales in India last year were 44.9 billion KRW, down 45% from 82.6 billion KRW the previous year.

Sales in North America and emerging countries for direct export also decreased by 24% and 14% respectively due to economic slowdown and weak demand. Researcher Jung explained, "The decrease in sales increased the burden of fixed costs, significantly worsening profitability."

He continued, "Considering the decline in average selling prices due to the increased proportion of small equipment and the increased number of shutdown days at the Chinese factory due to concerns over COVID-19, this year's sales and operating profit are expected to be lower than previously forecast," adding, "For the stock price to rebound, market share in the excavator market must increase, or growth in the Indian market must be supported."

This content was produced with the assistance of AI translation services.