[Click e Stock] "Dong-A Hwasung, Growth in Electric and Hydrogen Vehicle Parts Sales"

[Asia Economy Reporter Hyunseok Yoo] KB Securities analyzed on the 9th that Dong-A Hwasung is showing growth in sales of electric and hydrogen vehicle parts. No investment opinion or target price was provided.

Dong-A Hwasung recorded sales of 62.9 billion KRW and operating profit of 3.3 billion KRW in the first quarter. Compared to the same period last year, sales decreased by 5.9%, but operating profit increased by 55.9%. KB Securities researcher Sang-guk Lim said, "Sales slightly decreased due to the impact of the novel coronavirus infection (COVID-19), but operating profit increased significantly due to a decline in raw material prices and a reduction in selling and administrative expenses," adding, "Net profit recorded a loss due to foreign exchange losses caused by the sharp depreciation of the Russian ruble and Mexican peso, but exchange rate stabilization has continued into the second quarter."

Researcher Lim expects that sales decline will continue until the second quarter due to the impact of COVID-19, but performance normalization will appear in the second half. He said, "Based on the country's top-level rubber compounding technology and structural design, the company holds an absolute market advantage in the automotive and home appliance rubber parts market," adding, "It is not content with the domestic market and is expanding into the global market to seek growth momentum." He also added, "Currently, there are nine overseas production subsidiaries, and the operating rate of the Chinese subsidiary, which was sluggish in the first quarter, is improving significantly in the second quarter. The production yield of the second plants in the U.S. and India is expected to return to normal track after the second half, so future performance improvement is anticipated."

He emphasized, "Battery pack gaskets for electric vehicles are currently supplied to U.S. GM, China’s First Automobile Works and Great Wall Motors, Hyundai Motor, and others," adding, "Attention should be paid to the growth potential of eco-friendly rubber products such as intake and exhaust hoses for hydrogen vehicles and integrated gaskets for hydrogen fuel cell stack bipolar plates." He further added, "Full-scale mass production of battery injection parts for North American automobiles after the third quarter is also expected to act as a positive momentum."

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