[Click eStock] "Hyosung Heavy Industries to Sustain Growth Amid Long-Term Boom... Target Price Raised"

Target Price Raised from 2.5 Million Won to 2.9 Million Won

On February 3, Shinhan Investment & Securities raised its target price for Hyosung Heavy Industries from 2.5 million won to 2.9 million won, expecting the company's long-term boom and continued growth. The investment opinion remains 'Buy'.

Lee Dongheon, a researcher at Shinhan Investment & Securities, stated, "We have raised the target price by 16% compared to the previous level, applying a price-to-earnings ratio (PER) of 28.6 times—70% higher than the average PER of the three domestic power equipment companies from 2022 to 2024—to the average earnings per share (EPS) of 102,412 won for 2026 and 2027." He added, "Endless growth continues, and the only concerns are the elevated share price and increased volatility."

In the fourth quarter of last year, Hyosung Heavy Industries reported sales of 1.743 trillion won, up 11% year-on-year, and operating profit of 244.5 billion won, up 112%. According to Lee, "Both sales and operating profit exceeded the consensus (the average of securities firms' forecasts) by 5% and 25%, respectively, delivering a surprise result." He further analyzed, "Last year, the company posted surprise earnings not only in the fourth quarter but in every quarter." By segment, the heavy industries division recorded sales of 1.2127 trillion won (up 14%) and operating profit of 244.5 billion won (up 112%), while the construction division posted sales of 529.4 billion won (up 4%) and operating profit of 15.8 billion won (down 7%). Lee noted, "New orders in the heavy industries division increased by 85% to 2 trillion won, and the order backlog rose by 30% to 12 trillion won." He added, "Despite setting aside provisions for bad debts, the construction division delivered solid results through stable cost management and conservative business reviews."

Growth is expected to continue this year as well. Lee said, "This year's guidance for the heavy industries division suggests sales growth of around 15% and an operating margin in the upper 10% range, indicating that further growth is possible with conservative management indicators." He added, "Orders are also expected to increase by around 10%, and considering the timing of capacity expansion and product shipments, growth will likely be concentrated in the second half of the year rather than the first."

With earnings growth, valuation pressures are expected to gradually ease. Lee commented, "The high valuation will be resolved over time as earnings grow," and added, "Since the industry upcycle still has room to run, volatility should be seen as an opportunity."

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