[Click eStock] "Hyundai Mobis, Profitability Recovery Slow but External Growth Continues"

NH Investment & Securities maintained a Buy rating and a target price of 300,000 KRW for Hyundai Mobis on the 28th, citing expectations of gradual profitability improvement.

Researcher Jo Suhong of NH Investment & Securities explained, "Margin recovery has been slow during the investment expansion cycle," adding, "However, it is important to note the continued strong sales growth in the electrification business."

He continued, "As external growth continues, mid- to long-term profitability improvement is expected due to efficiency improvements from accumulated business experience and easing of research and development (R&D) burdens," and "Expansion of non-captive orders is also a factor for mid- to long-term external growth expectations. Additionally, Hyundai Mobis holds approximately 7 trillion KRW in net cash as of Q2 this year, providing sufficient financial capacity for future new business initiatives."

Hyundai Mobis's Q2 sales reached 15.6849 trillion KRW, up 27.4% year-on-year, and operating profit was 663.8 billion KRW, up 64.6%, in line with NH Investment & Securities and consensus estimates.

The A/S division's operating profit margin recovered to a normal level of 21.1%, and although the module division's operating profit is still small, it turned positive with an operating profit margin of 0.7%.

Q2 electrification sales amounted to 3.7436 trillion KRW, a 78.2% increase year-on-year, maintaining growth momentum. The sales proportion also expanded to 23.9%. With the expansion of external growth, the R&D ratio relative to parts manufacturing and electrification sales in Q2 was 5.8%, continuing a downward trend compared to 6% in the previous quarter and 7.9% in the same period last year.

The amount of non-captive orders in the first half of the year was 2.7 billion USD, achieving 51% of the annual target. Additionally, interim dividends and plans for share repurchase and cancellation related to shareholder returns were announced.

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