[Click eStock] “Hyundai Heavy Industries Holdings Expected to Meet Market Expectations for Q4 Last Year”

[Asia Economy Reporter Eunmo Koo] KB Securities forecasted that Hyundai Heavy Industries Holdings' fourth-quarter results last year would meet market expectations. The investment opinion and target price were maintained at 'Buy' and 420,000 KRW, respectively.

On the 2nd, KB Securities analyst Dongik Jung estimated in a report that Hyundai Heavy Industries Holdings' fourth-quarter revenue last year would record 6.63 trillion KRW, down 10.7% year-on-year. Operating profit for the same period is expected to turn positive at 308 billion KRW, with a net income attributable to controlling interests of 158.1 billion KRW. Analyst Jung stated, "Hyundai Oilbank, which recorded a large operating loss in the fourth quarter of last year due to the decline in international oil prices, is expected to normalize its performance, and other subsidiaries such as Hyundai Construction Equipment are not expected to have significant issues."

The financial structure is expected to improve with the completion of the sale of Hyundai Oilbank shares worth 1.4 trillion KRW. In April, Hyundai Heavy Industries Holdings contracted to sell 17% (41.66 million shares) of its 91% stake in Hyundai Oilbank to Saudi Arabia's state-owned oil company Aramco at 33,000 KRW per share and recently received the payment. The total sale amount was 1.3749 trillion KRW, which translates to an enterprise value of Hyundai Oilbank at 8.09 trillion KRW based on 100% equity. Analyst Jung noted, "Although the possibility of immediately pursuing an initial public offering (IPO) has decreased, this sale confirmed Hyundai Oilbank's enterprise value and is expected to positively impact performance and financial structure improvement through debt reduction."

The impact of the ex-dividend is not expected to last long. Hyundai Heavy Industries Holdings promised the market to pay dividends of more than 18,500 KRW per share this year, funded by stable dividends from Hyundai Oilbank. The dividend yield is 5.5%, which is the highest among non-financial stocks in the KOSPI 200. Analyst Jung said, "Although the stock price recently declined due to the ex-dividend effect, considering the stable performance of Oilbank, improvement in the shipbuilding industry, and high and stable dividends, a stock price recovery is expected."