[Click eStock] "HL Mando, High China Exposure Causes Short-Term Uncertainty... Target Price Down"

NH Investment & Securities announced on the 5th that it is lowering the target price for HL Mando from 68,000 KRW to 61,000 KRW. The main reason is concerns over China's economic slowdown.

HL Mando is a manufacturer and seller of automotive parts. In the second quarter, it recorded sales of 2.0868 trillion KRW and an operating profit of 77 billion KRW. As of the second quarter, HL Mando's sales proportion in China was about 23%, which is higher than Hyundai Motor Group's China production ratio of 5.1%. While this is positive in terms of long-term growth potential, the relatively high proportion of Chinese business compared to other parts companies is considered a short-term uncertainty factor. Among HL Mando's sales in China, Hyundai Motor Group accounts for only 7%, with local companies making up about 40% and North American OEMs about 50%.

Car sales in China have been declining since June. China's automotive demand experienced relatively less market shock compared to other countries after COVID-19, and rapid electrification transition acted as a buffer. Therefore, recent real estate risks are likely to have a greater impact on actual demand, according to analysis.

Researcher Jo Suhong of NH Investment & Securities said, "The mid- to long-term profitability improvement trend remains valid, but considering macro uncertainties in China, we are lowering expectations for mid- to long-term performance improvement," adding, "The recent aggressive price cuts by North American electric vehicle companies can be offset by mid- to long-term volume growth."

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