[Click eStock] "Hyundai Mobis, Q3 Earnings Expected to Decline... Target Price Down"

[Asia Economy Reporter Song Hwajeong] Hana Financial Investment on the 12th downgraded the target price of Hyundai Mobis from 370,000 KRW to 330,000 KRW, anticipating weak earnings for the third quarter of this year. The investment opinion was maintained as 'Buy.'

Song Seonjae, a researcher at Hana Financial Investment, explained, "The third-quarter earnings are expected to fall short of expectations due to a decline in sales mainly in module assembly and core components, caused by production disruptions at major customers due to a shortage of automotive semiconductors. We have lowered the earnings estimates for 2021 and 2022 accordingly and adjusted the target price to reflect this."

Hana Financial Investment expects Hyundai Mobis's third-quarter sales to decrease by 4% year-on-year to 9.6 trillion KRW, and operating profit to fall by 19% to 485.9 billion KRW, missing market expectations. Due to production disruptions caused by the shortage of automotive semiconductors, global production at major customers is expected to decline by 9%, and with a depreciation in exchange rates compared to the same period last year, sales of module assembly and parts manufacturing are expected to decrease by 11% and 14%, respectively. Electrification sales are projected to increase by 27%, supported by a 34% rise in eco-friendly vehicle production by customers, and after-sales service (AS) parts sales are expected to grow by 2%, benefiting from a low base in the previous year despite unfavorable exchange rates. Researcher Song explained, "While profitability in the AS segment is maintained, profitability is expected to decline due to fixed cost burdens from decreased module sales and rising sea and air freight costs."

Quarterly earnings are expected to improve from the third quarter low. Researcher Song analyzed, "Concerns about weak third-quarter earnings have already been reflected in the stock price, lowering valuation, and semiconductor and motor supply conditions are somewhat improving, so quarterly earnings are expected to recover from the third quarter low. In particular, electrification sales are experiencing high growth, supported by customers' rapid transition to electric and hydrogen vehicles." He added, "In the mid-to-long term, it is necessary to keep in mind the possibility of positive changes in the business structure through internalization of semiconductor and autonomous driving technologies within the group."

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