[Weekend Money] Which Auto Parts Companies Will Benefit If EV Sales Surge?

On April 25, Daol Investment & Securities identified Hyundai Mobis and SL Corporation as automotive parts companies poised to benefit from a rebound in electric vehicle (EV) demand.

Photo by Google Gemini generated

The European Automobile Manufacturers’ Association (ACEA) announced on April 23 (local time) that in the first quarter, the market share of battery electric vehicles in the European Union (EU) reached 19.4%, up 15.2% year-on-year. Hybrid electric vehicles accounted for a 38.6% share.

Daol Investment & Securities predicted that, with the increase in EV demand, the overall corporate value of automotive parts suppliers would normalize. The companies highlighted were Hyundai Mobis and SL Corporation, for which the target prices were set at 6 million won and 1 million won, respectively, with a maintained ‘buy’ rating.

Woong Yoo, an analyst at Daol Investment & Securities, said, “In the case of Hyundai Mobis, it has begun supplying battery packs locally in the United States, starting with its response to Hyundai Motor Group Metaplant America (HMGMA), and has started to receive Advanced Manufacturing Production Credit (AMPC).” He added, “Since last month, we have entered a period of high oil prices, and with the rebound in U.S. EV demand, Hyundai Mobis could see an upward revision in its AMPC earnings.” He continued, “If this materializes, we expect to see a valuation rerating across the auto parts sector.”

Daol Investment & Securities estimated Hyundai Mobis’s operating profit for the first quarter at 824.4 billion won. Although the stock price change has slowed compared to the previous quarter, the turnaround in the electrification segment is expected to be significant from the second quarter. Analyst Yoo said, “Among the finished carmakers, Kia is leading the sharp increase in EV sales, and Hyundai Mobis’s corporate value has started to reflect this.”

For SL Corporation, the outlook is positive as its MLA (Micro Lens Array) headlamps have been adopted in all Genesis models and Hyundai’s Ioniq series. MLA technology arranges thousands of ultra-fine lenses to precisely control the direction and intensity of light. Compared to conventional full-LED types, the average selling price (ASP) is expected to increase by at least 20–30% or more.

Analyst Yoo said, “Hyundai Motor Company has begun expanding MLA application from Genesis-only models to volume models (mainstream models), starting with Ioniq 9 and Grandeur. Compared to the previous switch from HID (gas discharge lamps) to LED, a much steeper ASP increase is expected.” He added, “First quarter operating profit is expected to be 113.8 billion won—the largest among domestic parts suppliers (down 0.8% year-on-year).”

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