[Click eStock] "Hyosung Heavy Industries, Profitability Improvement to Accelerate Further... Target Price Raised"

Target Price Raised by 55.6% Compared to Previous Estimate

On November 3, Korea Investment & Securities raised its target price for Hyosung Heavy Industries from 1.8 million won to 2.8 million won, anticipating that the company's profitability will improve at a faster pace going forward. The investment opinion was maintained as 'Buy'.

Jang Namhyun, a researcher at Korea Investment & Securities, stated, "We are raising our target price by 55.6% compared to the previous level," and explained, "This is the result of changing the estimated earnings per share (EPS) used to calculate the target price from 2026 to 2027, and raising the 2027 EPS estimate by 35.4% compared to the previous estimate." He added, "For the target price-earnings ratio (PER), we applied the 2027 average PER of global power equipment companies (ABB, Schneider Electric, Eaton, Hitachi). The average annual EPS growth rate of these companies from 2025 to 2027 is 13.8%. In contrast, Hyosung Heavy Industries is at 47.0%, securing the fastest profit improvement rate compared to its global peers."

In the third quarter of this year, Hyosung Heavy Industries recorded consolidated sales of 1.6241 trillion won, up 41.8% year-on-year, and operating profit of 219.8 billion won, up 97.3%. Researcher Jang analyzed, "This performance exceeded the consensus operating profit estimate of 153.8 billion won by 42.9%," and added, "The proportion of U.S. sales in the heavy industries division increased by 3 percentage points from the previous quarter to reach 26%, and the operating profit margin of the U.S. manufacturing subsidiary was 35%. As a result, the operating profit margin of the heavy industries division reached 17.1%, which is 2.9 percentage points higher than the previous estimate, achieving the highest quarterly margin despite reflecting 10 billion won in tariff costs." The construction division also saw profitability improve as one-off costs were resolved, recording an operating profit margin of 5.0%.

The proportion of U.S. sales in the heavy industries division is expected to continue increasing. Researcher Jang stated, "We estimate the U.S. sales proportion in 2026 and 2027 to be 29% and 35%, respectively," and added, "Reflecting the profitability improvement from increased U.S. sales, we have raised our operating profit margin estimates for the heavy industries division in 2026 and 2027 by 1.4 percentage points and 4.9 percentage points, respectively, compared to previous estimates. We also raised our operating profit estimates for 2026 and 2027 by 10.2% and 30.6%, respectively, reflecting the steep growth in the heavy industries division and improved profitability in the construction division."

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