[Click eStock] "Government Housing Supply Expansion is a Positive Factor... Hyundai Elevator Target Price Up"

Both Ruling and Opposition Parties Advocate Expanding Housing Supply... Elevator Demand Also Expected to Rise

[Asia Economy Reporter Minwoo Lee] Hyundai Elevator is expected to improve its overall profitability. This follows a shift to an increasing trend in new housing construction and elevator installations since the second half of last year, and it is analyzed that the company will benefit from the government's housing supply expansion policy.

On the 31st, NH Investment & Securities maintained its 'Buy' rating on Hyundai Elevator and raised the target price by 21.4% to 68,000 KRW. The closing price on the previous trading day was 53,500 KRW.

Steady earnings growth is interpreted as the basis for the target price increase. NH Investment & Securities forecast Hyundai Elevator to record sales of 1.915 trillion KRW and an operating profit of 164 billion KRW this year. These are estimated to increase by 5.1% and 9.3%, respectively, compared to last year. In 2022, sales of 2.142 trillion KRW and operating profit of 193 billion KRW are also expected to continue the growth trend.

This is because elevator installation volume is expected to expand as housing construction starts increase. Jinmyung Choi, a researcher at NH Investment & Securities, explained, "In the long term, the expansion of housing supply will drive the increase in elevator demand. While domestic construction starts increased by 15.6% in Q4 last year and 13.1% in Q1 this year compared to the same period last year, elevator installations increased by 5.3% and 13.3%, respectively, during the same periods, closely following the housing construction indicators."

In addition to profit improvement from increased sales, non-operating income and expenses are also expected to improve. Researcher Choi analyzed, "Due to the separation from Hyundai Merchant Marine (HMM) and the termination of derivative contracts, the sensitivity of foreign exchange and derivative-related gains and losses and equity method gains and losses of subsidiaries has eased compared to before. It is also positive that subsidiaries engaged in hotel, leisure, and financial businesses are showing signs of bottoming out."

As housing supply expansion is politically highlighted, continuous benefits from the expansion of housing supply are expected in the future. In fact, both the ruling and opposition parties have proposed housing supply expansion as a pledge. The government also announced plans to supply at least 33,000 additional homes through new land development in Seoul as a measure against real estate overheating. Seoul Mayor Seohun Oh is encouraging redevelopment projects by abolishing the 'Residential Maintenance Index' evaluation regulation and simplifying resident consent procedures related to redevelopment. Researcher Choi forecasted, "Although there are differences in the specific approaches of both parties, elevator demand will expand compared to before regardless of which direction is taken."

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