[Click eStock] "Hyundai Mobis, Rapid Recovery Expected from Q2 After COVID Shock"

[Asia Economy Reporter Park Jihwan] Hyundai Motor Securities stated on the 10th that Hyundai Mobis is expected to show a rapid recovery from the impact of the COVID-19 outbreak starting from the second quarter of this year. However, while maintaining the investment opinion as 'Buy,' the target price was lowered by 21.88% from the previous 320,000 KRW to 250,000 KRW.

Jang Munsu, a researcher at Hyundai Motor Securities, explained, "The first quarter sales are expected to be 8.5 trillion KRW, down 3.3% year-on-year, and operating profit for the same period is forecasted to decrease by 18.9% to 400.3 billion KRW," adding, "this is attributed to a 11.7% decline in global shipments due to the spread of COVID-19, and a contraction in A/S demand caused by movement restrictions in Europe, the United States, and other regions."

However, from the second quarter, it is expected that the lifting of movement restrictions and production halts in various countries will lead to a faster production recovery compared to competitors.

Researcher Jang analyzed, "By utilizing domestic CAPA capable of normal production to respond to exports to major countries such as the United States and Europe, it is expected to enable a faster response to market demand compared to competitors who rely heavily on local production." He added that, especially compared to competitors with high dependence on the United States and Europe, the financial burden due to local production and demand disruptions is not significant.

Researcher Jang also viewed "low liquidity risk due to high cash holdings, the effectiveness of new car effects in the United States, and responsible management following the major shareholder's purchase of shares" as positive factors.