[Click eStock] "Hyundai Glovis, Rebound Timing Delayed Until After Q3"

[Asia Economy Reporter Eunmo Koo] Ebest Investment & Securities forecasted that the rebound timing for Hyundai Glovis will be delayed until after the third quarter due to the impact of global automobile manufacturers' factory shutdowns.

On the 20th, researcher Woojung Yoo of Ebest Investment & Securities stated in a report, "Over the past three days, global automobile manufacturers announced factory shutdown schedules in response to the spread of the novel coronavirus infection (COVID-19)." He added, "In particular, in Europe, major original equipment manufacturers (OEMs), including Hyundai, Kia, and Volkswagen, have announced shutdowns, and most are expected to last for two weeks or more." He further explained, "This phenomenon is expected to affect not only automobile transportation but also the overall supply chain of parts, causing temporary disruptions across Hyundai Glovis's overseas logistics, PCC, and CKD businesses."

The rebound timing is expected to be delayed until after the third quarter of this year. Researcher Yoo explained, "Hyundai Glovis experienced a structural profit improvement trend last year as non-captive sales to global OEMs rapidly increased, resulting in continuous performance surprises." However, he forecasted, "Due to the impact of COVID-19, it is inevitable that the PCC and overseas logistics businesses, which led growth, will enter a profit decline trend until the second quarter. Although there is a possibility of a surge in transportation demand following the implementation of automobile industry stimulus measures, it is still too early to expect this." He added, "In the first quarter, the hull insurance payment of approximately 104.7 billion KRW from the Golden Ray ship accident was received earlier than expected, which is likely to limit financial damage."

The target stock price was lowered from 220,000 KRW to 90,000 KRW. Researcher Yoo explained, "The target stock price was calculated by applying a price-to-earnings ratio (PER) of 5.8 times to the estimated earnings per share (EPS) of 15,768 KRW, excluding insurance reimbursements. Since automobile industry operating rates have significantly declined mainly in Europe and the United States, the target PER was conservatively applied."

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