[Click eStock] "Mando, Q2 Earnings Slump Is Temporary"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained its buy rating and target price of 82,000 KRW for Mando on the 12th.

Mando's operating profit for the second quarter is expected to decrease by 32.6% year-on-year to 551.7 billion KRW. This is forecasted to fall short of market expectations by 26%. Although various costs such as raw material and logistics expenses increased, the burden of costs became more pronounced due to sluggish sales. Sales are estimated to decline by about 2% compared to the previous quarter, despite the second quarter being a peak season.

Jinwoo Kim, a researcher at Korea Investment & Securities, said, "China, which accounts for 24% of sales, experienced poor second-quarter performance due to city lockdowns," adding, "The production slowdown of North American electric vehicle clients, whose sales have grown to about one-third of China's level, also impacted Mando's performance."

With Hyundai-Kia's market share in China dropping to the 1% range, Mando is the only large parts manufacturer generating significant sales in China. This is because it is targeting both Chinese local companies and North American electric vehicle manufacturers simultaneously. Although the poor performance is prominent, there is reason to be optimistic for the second half of the year.

Researcher Kim explained, "Mando will actually receive more attention during the phase when Chinese automobile production rebounds," and added, "It is also positive that the Chinese Ministry of Commerce has implemented measures to activate automobile distribution and expand consumption." Last week, the Ministry of Commerce announced measures including the extension of electric vehicle acquisition tax reductions, revitalization of the used car market, strengthening support for automobile consumer loans, and promotion of automobile consumption.

Researcher Kim stated, "The second-quarter slump is expected to be temporary, with profitability recovery anticipated in the second half," and "Benefits from the growth of North American electric vehicle clients are also expected."

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