[Market Focus] Hyundai Rotem Hits All-Time High on Strong Earnings Expectations

As of 9:20 a.m. on May 26, shares of Hyundai Rotem were trading at 138,100 won on the Korea Exchange, up 10.13% from the previous session's closing price. Shortly after the market opened, the stock climbed to 140,500 won, setting both a new 52-week high and an all-time record. This surge appears to be driven by heightened expectations for the company's performance amid the global K-defense boom.

Founded in 1999, Hyundai Rotem operates three main business divisions: the Defense Solution division, which handles mass production of K-series tanks and wheeled armored vehicles, as well as maintenance and overhaul projects; the Rail Solution division, which manufactures railway vehicles for national infrastructure, and provides E&M (Electrical & Mechanical) and O&M (Operation & Maintenance) services; and the Eco Plant division, which supplies steelmaking facilities, automotive production equipment, smart factory systems, and hydrogen infrastructure. The Defense Solution division accounts for more than half of the company's total revenue.

Previously, on May 15, Hyundai Rotem reported its first quarter results based on consolidated financial statements, posting sales of 1.1761 trillion won and operating profit of 202.9 billion won. Compared to the same period last year, sales surged by 57.3% and operating profit jumped by 354.0%. Notably, revenue from the highly profitable defense sector soared by 106.9%, rising from 318 billion won in the first quarter of last year to 658 billion won in the first quarter of this year.

Jung Dongik, an analyst at KB Securities who raised Hyundai Rotem's target price from 120,000 won to 165,000 won, commented, "This is the first time in the company's history that quarterly operating profit has exceeded 200 billion won," and added, "From now on, quarterly operating profit is unlikely to fall below 200 billion won."

He further stated, "Hyundai Rotem's average operating profit margin for defense exports over the past four quarters was 33.1%," and added, "Even taking into account factors such as a decline in the exchange rate, the operating profit margin for defense exports in the current order backlog is expected to remain above 30%."

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