[Click eStock] "Hyundai Elevator, Stable Earnings Growth Trend"

Meritz Securities Report
Investment Opinion Upgraded to Buy

[Asia Economy Reporter Minji Lee] Meritz Securities on the 24th upgraded its investment rating on Hyundai Elevator from neutral to buy and set a target price of 70,000 KRW.

In the first quarter, Hyundai Elevator recorded sales of 447.9 billion KRW and operating profit of 24.9 billion KRW, increasing by 9.6% and 9% respectively compared to the same period last year. Despite sluggishness in the tourism accommodation sector including Hyundai Training Institute and Able Hyundai Hotel, as well as in travel and construction industries, the installation and maintenance service sector achieved an operating profit margin of 15.6%, resulting in improved performance.

The productivity of the elevator manufacturing division, which holds a market share of 39.9%, is expected to improve significantly. In April, the company completed the Shanghai Smart Campus in China, expanding annual production capacity by 25,000 units, and the investment to relocate its headquarters from Icheon, Gyeonggi Province to Chungju is expected to be completed by 2022.

Researcher Kim Hyun of Meritz Securities said, “There will be an increase in new elevator demand due to domestic reconstruction and redevelopment, as well as replacement demand in first- and second-generation new towns. With the revision and strengthening of the Elevator Safety Management Act Enforcement Decree in 2019, market share expansion and profitability improvement in the installation and maintenance service sector are also expected.”

Researcher Kim added, “Although Hyundai Elevator showed high stock price volatility as it was classified as a stock related to inter-Korean cooperation due to its 74% stake in its subsidiary Hyundai Asan, it is now time to focus on domestic and international construction market conditions. Hyundai Elevator maintained stable performance with annual operating profit increasing by 10% year-on-year despite COVID-19.”

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