[Click eStock] "Hyundai Glovis, High Growth Expected Due to Auto Demand Recovery"

Record-Breaking 500 Billion KRW Maritime Transport Contract Signed the Day Before
Non-Affiliated Company Sales Share Continues to Rise... Nearly 60% Already

Hyundai Glovis car carrier (PCTC) 'Glovis Century' (Provided by Hyundai Glovis)

[Asia Economy Reporter Minwoo Lee] Hyundai Glovis is expected to experience high growth. Analysts predict continued performance growth due to the recovery in demand in the automotive industry and steady orders from both affiliated and non-affiliated companies.

On the 17th, Hana Financial Investment maintained its 'Buy' rating and target price of 250,000 KRW for Hyundai Glovis based on these factors. The closing price the previous day was 164,500 KRW.

They particularly highlighted the recent large-scale contract as a key factor. The day before, Hyundai Glovis announced that it had signed a maritime transportation contract worth 501.8 billion KRW with a global automaker for China-origin shipments bound for Europe. The one-year contract amount of 501.8 billion KRW is the largest single contract Hyundai Glovis has signed since entering the maritime transportation business in 2010. It is also said to be an unprecedented scale in the global finished vehicle maritime transportation market.

The contract size accounts for 2.3% of Hyundai Glovis's expected sales of approximately 21.7 trillion KRW this year, but it is estimated to represent 22% of the finished vehicle maritime transportation sales. Hyundai Glovis is already handling maritime transportation on the China-Europe route with the contract partner, and this contract significantly expands the scale. This is expected to increase total sales by more than 1% and greatly contribute to customer diversification.

Finished vehicle maritime transportation sales are expected to continue high growth in the future. Sales in this segment increased by 34% in 2019 but decreased by 17% last year due to a sharp decline in global finished vehicle sales. However, this year and next year, sales are expected to rise by 34% and 11%, respectively, reaching 2.28 trillion KRW and 2.53 trillion KRW, supported by increased cargo volume and rising freight rates. Notably, the proportion of non-affiliated sales from overseas automakers such as Volkswagen (VW), BMW, Daimler, Tesla, Ford, General Motors (GM), as well as used cars and project heavy cargo (Hyundai Construction Equipment, Volvo, Doosan), has been steadily increasing. It rose from the low 50% range in 2019 to the high 50% range based on cumulative figures for the third quarter of this year.

Song Seonjae, a researcher at Hana Financial Investment, said, "Although the stock price has been sluggish recently due to concerns about a short-term reversal in freight rates in the shipping sector, the recovery in automotive industry demand, increased production at Hyundai Motor and Kia's factories in Indonesia and India, and steady orders of non-affiliated volumes sufficiently offset these concerns through growth in logistics, CKD (completely knocked down) products, and PCTC segments." He added, "The current price-to-earnings ratio (PER) is around 7 times, which is excessively undervalued compared to the core business growth."

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