[Click eStock] Haesung DS, Earnings Expected to Rise Due to Price Increase

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment on the 8th maintained a buy rating on Haesung DS and raised the target price to 52,000 KRW, up from the previous level.

Haesung DS's sales in the second quarter are expected to reach 149.6 billion KRW, a 26% increase year-on-year, while operating profit is forecasted to decline by 4% to 14.1 billion KRW. This surpasses market expectations by 2% and 8%, respectively. Similar to the previous quarter, the increase in selling prices led to better-than-expected sales, and the improvement in profitability also expanded.

Researcher Rokho Kim of Hana Financial Investment stated, "The rise in the weighted average selling price reflects the expansion of the proportion of relatively high-priced products during the electrification process and efforts to improve the product mix by limiting supply volume," adding, "Customers are actually demanding high-spec products."

This year, Haesung DS is expected to record sales of 589.3 billion KRW and operating profit of 55.8 billion KRW, representing increases of 29% and 28% year-on-year, respectively. Despite shortages in the supply of various components across the IT sector and rising raw material prices, meaningful performance is anticipated. Researcher Kim said, "As the increase in copper prices, a raw material, is being passed on to selling prices, profitability is expected to improve from the first quarter to the second quarter and further in the second half," adding, "Since profitability exceeded expectations from the second quarter, the annual performance outlook can be raised with higher visibility."

Haesung DS is also estimated to increase production volume through productivity efficiency improvements. Furthermore, while the total number of automobiles is important, structural external growth benefits are expected in the mid to long term due to the expansion of electrification and the proportion of electric vehicles. Researcher Kim added, "Despite being a company with a high stock price increase rate compared to the beginning of the year, the upward revision of earnings forecasts means that the valuation itself has not been rerated, making it a stock that can still be comfortably recommended."

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