[Click eStock] "Hyosung Heavy Industries, Expected Earnings Decline... A Buying Opportunity at Low Prices"

Q4 2023 Earnings, 'Earnings Shock'
High Possibility of Performance Improvement from Q1 2024
Mid-to-Long-Term Earnings Expected to Rise... "Buying Opportunity at Low Prices"

Daol Investment & Securities analyzed on the 30th that the anticipated weak performance of Hyosung Heavy Industries in the fourth quarter of 2023 could rather present a buying opportunity. They maintained a 'Buy' investment rating and a target price of 260,000 KRW. Hyosung Heavy Industries' closing price on the 29th was 180,500 KRW.

Researchers Jeon Hyeyeong and Cha Yoonji from Daol Investment & Securities stated, "Although lower profitability compared to competitors may exert downward pressure on the stock price in the short term, attention should be paid to this year's performance as the projects ordered in 2023 begin to generate revenue in earnest," adding, "From the first quarter of 2024, performance improvements are expected to be confirmed, allowing for a reduction in valuation discounts."

Hyosung Heavy Industries' fourth-quarter 2023 results showed sales of 1.3 trillion KRW and operating profit of 63.4 billion KRW, significantly below consensus (market average forecast). Profitability declined in the heavy industry sector due to increased labor costs from wage hikes and bonus payments related to labor-management negotiations, and in the construction sector, profitability slightly decreased due to rising labor and raw material costs. However, it is estimated that there were no one-time factors related to PF risks.

The two researchers said, "An 'earnings shock' was recorded in the heavy industry sector due to revenue recognition from the completion of low-profitability ESS projects and one-time costs such as bonus payments," and added, "Considering last year's price increase trends and the boom in the power equipment market centered on North America, expectations for mid- to long-term performance will likely rise when securing long-term contracts."

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