[Click eStock] "Hyundai Mipo Dockyard, Delayed Profit Turnaround"

On the 22nd, KB Securities maintained its 'Hold' investment rating and target price of 87,500 KRW for Hyundai Mipo Dockyard, expecting losses to continue in the third quarter.

Jung Dong-ik, a researcher at KB Securities, explained, "Contrary to market expectations anticipating a turnaround to operating profit, the continuation of losses in the third quarter is likely to disappoint many investors. Since the current stock price exceeds the target price, we maintain the existing 'Hold' rating."

The third-quarter earnings are expected to fall short of market consensus. KB Securities projected Hyundai Mipo Dockyard's third-quarter revenue to increase by 6.0% year-on-year to 935.3 billion KRW, with an operating loss of 22.4 billion KRW. Researcher Jung stated, "Although production disruptions caused by labor shortages are improving, the lower exchange rate compared to the previous quarter and the same period last year, persistently low shipbuilding prices, and a worsening product mix are estimated to weigh on performance. Additionally, the recently concluded wage and collective bargaining agreement (Wage and Labor Agreement) is expected to impose further burdens on third-quarter results."

While a return to profitability is anticipated in the fourth quarter, meaningful performance improvement is expected to require more time. Researcher Jung noted, "Failing to achieve profitability in the third quarter will likely increase the annual loss forecast for this year compared to previous estimates. Although the stock price has been adjusting since August, the price-to-book ratio (PBR) based on this year's expected earnings stands at 1.7 times, the highest level since 2008. Therefore, it is not too late to postpone substantial investment until performance improvement and the resulting easing of valuation pressure are confirmed."

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