[Click eStock] Hyundai Wia, Overseas Shipment Increase 'Steady Performance'

[Asia Economy Reporter Lee Seon-ae] Shinhan Investment Corp. announced on the 31st that it maintains a buy rating and a target price of 80,000 KRW for Hyundai Wia. As of the 28th, the stock price was 64,000 KRW, indicating an upside potential of 25%. This is because overseas market shipment volumes are improving faster than expected, suggesting stable earnings prospects.

Jung Yong-jin, a researcher at Shinhan Investment Corp., stated, "There are many events that will serve as momentum for the machinery division toward the end of the year. Investment in the group’s new electrification plant in North America has begun, and equipment bidding is expected within the year," adding, "In defense, contracts related to increased exports of K2/K9 may be finalized."

Among automotive parts companies, Hyundai Wia has high exposure to emerging markets. While new business ventures (electric vehicles/air conditioning/robots) are the momentum for the stock price, the momentum for earnings lies in sales performance in emerging markets. In the past, the Shandong subsidiary in China was capable of quarterly sales exceeding 300 billion KRW on average, but in the first half of this year, sales amounted to only 167.7 billion KRW, which eroded overall profitability. From the third quarter, the group’s sales in China are improving. After hitting a low of 62,000 units shipped in the second quarter, shipments recovered to 119,000 units in the third quarter. Shipments are expected to rise in the fourth quarter as well, making it likely that the Shandong subsidiary will recover compared to the previous quarter. Positive performance in Mexico is also anticipated. Sales there reached 652.3 billion KRW in 2021 and already recorded 449.5 billion KRW in the first half of this year. As it responds to the robust U.S. market, the most resilient in the global automotive sector, the upward trend in shipments is expected to continue.

Meanwhile, third-quarter earnings were recorded at 2.1 trillion KRW in sales, up 17%, and operating profit of 55.7 billion KRW, up 79%. The automotive division has maintained a stable earnings trend since the beginning of the year due to recovery in finished vehicle sales and mix improvement centered on SUVs and Genesis models. However, the machinery division saw a decline in scale due to delayed revenue recognition for some products.

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