[Weekly HOT Stocks] Hyundai Mobis, Q4 Expectations Rise... Foreigners Net Buying Momentum

Brokerages Also Raise Target Prices... "Expecting Valuation Increase in Q4"

[Asia Economy Reporter Kum Boryeong] As analyses suggest that Hyundai Motor Group has entered a sales recovery phase, expectations for Hyundai Mobis in the fourth quarter are also rising. Foreign investors have been buying Hyundai Mobis shares throughout the week.

According to Eugene Investment & Securities on the 20th, Hyundai Mobis's third-quarter earnings are estimated at KRW 9.1 trillion in sales and KRW 492 billion in operating profit. Compared to the previous year, these figures represent decreases of 3% and 18.6%, respectively. The decline in profit is expected due to production cuts caused by inventory adjustments in finished vehicles and reduced demand for vehicle after-sales service (A/S) amid the COVID-19 pandemic.

However, analyses indicate that Hyundai Motor Group has entered a full-fledged sales recovery phase, centered on the domestic market and the United States. Yoo Ji-woong, a researcher at Ebest Investment & Securities, explained, "With Hyundai Motor Group's sales recovery, the operating rate of Hyundai Mobis's parts manufacturing and module divisions is also expected to recover rapidly. Due to the trend of larger finished vehicles and the advancement of per-vehicle content such as infotainment and advanced driver-assistance systems (ADAS), Hyundai Mobis's average selling price is also expected to rise concurrently." Lee Jae-il, a researcher at Eugene Investment & Securities, emphasized, "Although there is a short-term lack of performance momentum compared to finished vehicles, expectations for earnings will increase toward the end of the year with production increases in the fourth quarter."

In particular, sales from the electrification business are expected to increase rapidly starting in the fourth quarter. Researcher Yoo said, "Considering that at least three electric vehicles are scheduled to be launched next year following the Ioniq 5, which will be supplied from January, it is reasonable to assume that next year will be the first year surpassing the break-even point (BEP). In addition to battery packs, the Power Electronics Module (PEM) will be supplied based on 4WD, improving the profit structure. Therefore, we expect Hyundai Mobis's valuation to rise starting from this year's fourth quarter, when the electrification business's scale rapidly expands."

Brokerages have raised their target prices for Hyundai Mobis. Ebest Investment & Securities raised it from KRW 220,000 to KRW 270,000, and Hyundai Motor Securities increased it from KRW 280,000 to KRW 310,000. The closing price on the 18th was KRW 240,000.

Foreign investors bet on the stock price increase by adding Hyundai Mobis shares to their portfolios from the 14th to the 18th. During this period, they purchased a total of KRW 67.6 billion worth of shares, placing Hyundai Mobis fifth among the top net foreign purchases in the KOSPI market.

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