[Click eStock] "Hyundai Mobis, Poor First Half Performance Due to COVID-19... Target Price Down"

[Asia Economy Reporter Song Hwajeong] Hanwha Investment & Securities on the 16th forecasted that Hyundai Mobis's first-half performance would be sluggish due to the novel coronavirus disease (COVID-19) and lowered the target stock price from 320,000 KRW to 220,000 KRW. The investment opinion was maintained as 'Buy.'

Kim Dongha, a researcher at Hanwha Investment & Securities, said, "Due to the impact of COVID-19, a poor performance in the first half is expected, and the target stock price was lowered following changes in earnings estimates. However, the stock price has already plunged sharply since February, reflecting much of these factors."

Hanwha Investment & Securities estimated Hyundai Mobis's first-quarter performance this year at sales of 8.34 trillion KRW and operating profit of 442.5 billion KRW. These figures represent decreases of 4.6% and 10.4%, respectively, compared to the same period last year. Researcher Kim analyzed, "In the module division, sales are expected to decrease by 5.8% to 6.53 trillion KRW, and an operating loss of 6.5 billion KRW is anticipated, turning to a deficit. Despite increased sales of eco-friendly vehicles by Hyundai Kia Motors and the effect of new car launches, the impact of COVID-19 has led to reduced production volumes domestically and in China, resulting in poor performance." The after-sales service (A/S) division is estimated to have sales increased by 0.1% to 1.81 trillion KRW and operating profit decreased by 1.2% to 449 billion KRW. Kim explained, "Although the number of vehicles in operation and demand for domestic and overseas automobile A/S have increased and the Korean won has weakened, the outbreak of COVID-19 is expected to reduce A/S demand in domestic and European markets."

The sluggish performance trend is expected to continue into the second quarter. Hanwha Investment & Securities projected Hyundai Mobis's second-quarter performance at sales of 8.23 trillion KRW, down 13%, and operating profit of 403.2 billion KRW, down 35.7%. Researcher Kim said, "Production disruptions at Hyundai Kia Motors' overseas factories and shrinking demand in major automobile markets will inevitably reduce overseas subsidiaries' performance. Additionally, the strengthening of social distancing measures due to the spread of COVID-19 is likely to decrease A/S demand."

However, if the spread of COVID-19 slows down, a rapid recovery in performance is expected. Researcher Kim stated, "If the spread of COVID-19 slows, performance will quickly recover due to increased volume and per-unit sales from Hyundai Kia Motors entering a new car cycle and growth in the electrification sector driven by expanded sales of eco-friendly vehicles. Furthermore, considering the mid- to long-term growth potential through Hyundai Motor Group's benefits from electrification and electronic components trends, an enhancement in corporate value is also anticipated."

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