[Click eStock] "Mando, Q2 Earnings Slump... Q3 Recovery Expected"

[Asia Economy Reporter Hwang Yoon-joo] Hana Securities forecasted on the 11th that Mando's second-quarter performance would be weaker than expected due to lockdown measures in major Chinese cities. The investment opinion 'Buy' and the target price of 65,000 KRW were maintained.

Song Seon-jae, a researcher at Hana Securities, stated, "Operating profit for the second quarter is expected to be 58.4 billion KRW, down 24% year-on-year, and sales are expected to increase by 14% to 1.69 trillion KRW, falling short of previous estimates."

Researcher Song explained, "Due to the semiconductor shortage, production disruptions continued at client companies, and especially, production at key customers in China, including global leading electric vehicle companies and Chinese OEMs, was negatively affected by city lockdown measures."

The operating profit margin is also expected to remain at 3.5%, down 1.7 percentage points. This is due to the rise in raw material costs that has continued since the second half of last year.

[Image source=Yonhap News]

Researcher Song analyzed, "Due to lockdown measures in major cities, automobile production in China in the second quarter is expected to be about 4.62 million units, which is a 5% decrease year-on-year and a 20% decrease compared to the first quarter."

Mando's production in April decreased by 41% compared to the previous year, the largest drop. Researcher Song said, "In May, production increased by 5%, and in June by 25%, showing signs of recovery from the related impact," and added, "The Chinese government's extension of subsidies to stimulate automobile demand is also expected to have a positive effect after the second half of the year."

Meanwhile, production of eco-friendly vehicles in China during the second quarter increased by 105% year-on-year and 11% quarter-on-quarter, significantly surpassing overall automobile production.

Exhibition booth overview of Mando participating in EVS28

Among these, the second-quarter China production of global leading electric vehicle companies, Mando's key customers, increased by 31% year-on-year but decreased by 34% quarter-on-quarter. Although April and May, when city lockdowns were severe, showed poor performance, June recorded the highest monthly production ever with a 135% increase year-on-year and a 142% increase quarter-on-quarter, indicating recovery.

Researcher Song assessed, "There will be temporary production disruptions in July due to facility investments for capacity expansion, but since this is aimed at increasing production after expansion, it is rather positive."

He added, "Mando's China performance is expected to follow a similar trajectory, and it is time to consider the recovery and additional opportunities after the third quarter rather than the confirmed delivery slump in the second quarter."

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