[Click eStock] "Among Hyundai Motor Group's 3 Companies, Hyundai Mobis with Poor Price Earnings Ratio Expected to Improve Next Year"
[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities forecasted that although Hyundai Mobis had the poorest stock return among the three Hyundai Motor Group companies this year, its profitability will improve from the bottom this year, and both operational and governance aspects will be better in 2021 compared to this year.
On the 7th, NH Investment & Securities projected Hyundai Mobis's operating profit to increase from 1.769 trillion KRW this year to 2.559 trillion KRW next year. Furthermore, it is expected to continue improving in the mid to long term, reaching 3.0081 trillion KRW in 2022.
According to NH Investment & Securities, Hyundai Motor Group's electric vehicle (EV/PHEV) sales target for 2025 is approximately 1 million units. Despite the anticipated decline in internal combustion engine sales, the expansion of electrification business is analyzed as a factor that can enhance Hyundai Mobis's mid to long-term top-line growth and profitability visibility.
As of 2025, consolidated sales are estimated to reach about 54 trillion KRW, and operating profit about 4.2 trillion KRW (operating margin 7.7%). In particular, the proportion of electrification sales is expected to expand to approximately 30.8%.
Researcher Cho Su-hong stated, "As the electrification business secures economies of scale, Hyundai Mobis's module division is expected to sustain mid to long-term top-line growth and profitability improvement trends," adding, "Investment decisions should focus on the future sales growth potential through the electrification business rather than short-term profitability."
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Researcher Cho added, "The high growth potential related to electrification is a factor for a long-term valuation premium for Hyundai Mobis," and "With the introduction of Hyundai Motor Group's dedicated electric vehicle platform (E-GMP) from 2021, the company's mid to long-term growth as a core parts supplier is expected." Accordingly, the investment opinion 'Buy' and target stock price of 370,000 KRW were maintained.
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