Does Myungshin Industry, Unaware of the 'Semiconductor Shortage'... Is It a Cyclical Stock or a Growth Stock?

[Asia Economy Reporter Lee Seon-ae] An analysis defining Myungshin Industry as a growth stock has been raised.

According to Hanwha Investment & Securities on the 20th, Myungshin Industry's Q3 consolidated results recorded sales of 269.7 billion KRW (YoY +26.5%, QoQ -1.9%), operating profit of 23 billion KRW (YoY +10.3%, QoQ +34.0%), and net profit attributable to controlling interests of 18.6 billion KRW (YoY +32.3%, QoQ +42.7%). Among listed parts companies with a market capitalization over 500 billion KRW, excluding holding companies, it was the only one to achieve profit growth both year-over-year and quarter-over-quarter. This was because the effect of increased production of North American electric vehicles (YoY +64.0%, QoQ +15.2%) outweighed the impact of decreased HMG shipments during the same period (YoY -9.6%, QoQ -12.6%). As a result, the sales proportion from North American electric vehicles expanded to 54.9% on a cumulative Q3 basis.

Junho Park, a researcher at Hanwha Investment & Securities, explained, "Despite an environment where parts companies found it difficult to achieve strong performance, Myungshin Industry realized profit growth thanks to the increased production volume of North American electric vehicles," adding, "Differentiated profit growth based on volume expansion is expected going forward."

Myungshin Industry's strong performance stands out even more amid production disruptions at traditional OEMs and the resulting poor performance of parts companies. However, even if there had been no semiconductor supply shortage, performance differentiation would have been possible. This is because no traditional OEM shows annual volume growth exceeding 50%. The sales proportion of North American electric vehicles for Myungshin Industry is expected to expand to 57% for the full year.

Researcher Park emphasized, "The contribution of North American electric vehicles, which continue to outperform the market in volume growth, will inevitably increase further (with parts supply from the Texas plant starting in 2022)," and added, "The rationale for viewing Myungshin Industry as a growth stock is already clear."

Meanwhile, the overhang volume, which is acting as a difficulty from the supply side, is estimated to be about 4.44 million shares remaining as of the end of Q3.

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