[Click eStock] "Hwashin, Order Momentum to Accelerate Starting Next Year"

Daol Investment & Securities Report

[Asia Economy Reporter Minji Lee] Daol Investment & Securities upgraded its investment opinion on Hwashin from Buy to Strong Buy on the 21st, maintaining the target price at 14,000 KRW.

Hwashin's sales in the third quarter are expected to reach 416.3 billion KRW, a 50% increase compared to the same period last year. Operating profit is anticipated to grow by 1,187% to 27.9 billion KRW. Yoo Ji-woong, a researcher at Daol Investment & Securities, stated, “Following the previous quarter, the company continues to enter a steep growth phase, and the effects of exchange rate and transportation cost reductions have contributed to expanding operating margins by more than 4 billion KRW compared to previous estimates. The increase in RV production mix by automakers and the expansion of production in high-margin regions such as India and the United States also positively impacted earnings.”

Sales by region showed clear growth led by the company and the United States. Sales growth rates for headquarters, India, Beijing, the United States, and Brazil are expected to be 45%, 36%, 43%, and 78%, respectively. In the North American region, the expansion of production volumes for RV vehicles such as Tucson and Telluride began in earnest from the third quarter, contributing to the company’s price increase.

The biggest growth momentum for next year and 2024 is securing new model volumes due to the expansion of Hyundai and Kia’s currently operating North American plants (Alabama, Georgia) and the expansion of orders for battery pack cases (BPC), a new business for automaker groups, securing long-term growth engines to respond to the electric vehicle market.

Researcher Yoo explained, “In the North American market, entry into the BPC business forms an integrated value chain that connects automakers, cell manufacturers, and parts suppliers, creating high entry barriers for existing body and chassis parts suppliers. In particular, the company is positioned on the core line supplying existing Hyundai and Kia volumes, so the order momentum is expected to accelerate from early 2023 when IRA application begins.”

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