[Click eStock] "HD Hyundai Electric, Stock Price Expected to Continue Rising Amid Power Equipment Boom"

On the 10th, BNK Investment & Securities newly issued a 'Buy' rating and a target price of 380,000 KRW for HD Hyundai Electric, stating that the stock price is expected to continue its upward trend considering the global power infrastructure investment and the transformer demand growth cycle. HD Hyundai Electric closed at 260,000 KRW on the previous trading day.

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Researcher Lee Sang-hyun of BNK Investment & Securities said, "The target price was derived by applying a valuation based on the 12-month forward book value per share (BPS), and the implied price-to-earnings ratio (PER) of the target price is about 30.3 times." He added, "According to the 2024 annual earnings forecast, sales are expected to increase by 23% year-on-year to 3.3372 trillion KRW, and operating profit is expected to rise by 65% to 519.4 billion KRW." The operating profit margin is also expected to increase by 3.9 percentage points year-on-year to 15.6%.

In North America, HD Hyundai Electric’s major export market, the power market is expected to continue growing due to reshoring, artificial intelligence (AI) data centers, and the expanded use of electric vehicles. In the Middle East, favorable orders are anticipated due to renewable energy operation goals for the Saudi NEOM project. In the shipbuilding market, an increase in orders for eco-friendly ships driven by environmental regulations is expected to improve sales and profitability of rotating machinery.

The researcher stated, "The order backlog is accumulating long-term orders, and we are responding with appropriate scale expansions." He added, "As the power equipment market boom cycle continues, the trend of new orders and order backlog growth is accelerating." As of the first quarter of 2024, the order backlog reached 5.08 billion USD, a 66% increase compared to the previous year. This is approximately 6.5 trillion KRW, representing about two years’ worth of orders. Recently received orders have delivery schedules beyond three years, classified as long-term orders. The company is responding to increased power equipment orders through expansions of the Ulsan and Alabama plants (around 20%), and through distribution sector expansions, sales are expected to increase by more than 250 billion KRW starting in 2026.

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