[Click eStock] "GoYoung, Automotive Sector Demand Slows... Target Price Down 16%"

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on Goyoung on the 30th, expecting its operating profit to decline this year, and lowered the target price by 16% from the previous level to 100,000 KRW.

Kim Kyung-min, a researcher at Hana Financial Investment, said, "Since the outbreak of the novel coronavirus infection (COVID-19), demand from the automotive sector, one of the front industries, has been slowing down," adding, "This is because the spread of COVID-19 has accelerated in the US and Europe, where sales accounted for more than 40% of last year's revenue by region." Researcher Kim revised Goyoung's 2020 operating profit down by 20%, from 39.6 billion KRW to 31.5 billion KRW.

The PER of the 'ROBO Index,' which includes Goyoung, was maintained at 28.2 times but dropped to 22.6 times after the COVID-19 outbreak. It is judged that this was influenced by the lowered earnings forecasts of analog semiconductor suppliers, which also affected Goyoung.

Researcher Kim Kyung-min diagnosed, "Goyoung's customers number over 1,000 and are globally distributed, so global demand inevitably affects its performance like analog semiconductor suppliers," and "Concerns about global demand have negatively impacted Goyoung's market capitalization."

Going forward, Goyoung is expected to benefit from factory automation policies for labor-intensive production lines. Researcher Kim Kyung-min explained, "After COVID-19, most countries including the US and China will actively pursue reshoring policies to bring manufacturing bases back domestically and will fully implement automation of labor-intensive production lines," adding, "In the mid to long term, benefits from structural changes in production methods are expected."