[Click eStock] "Hyundai Mobis at Long-Term Growth Trend Bottom, Target Price 400,000 KRW by 2025"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities expects that Hyundai Mobis has the potential for its stock price to rise about 2 times compared to the current price in the long term, with a target price based on 2025 earnings reaching approximately 400,000 KRW.

Although short-term performance decline is inevitable due to the impact of the novel coronavirus disease (COVID-19), starting from 2021, with the introduction of Hyundai Motor Group's dedicated electric vehicle platform, Hyundai Mobis's electrification segment profitability is expected to improve significantly. This growth in the module segment's scale and profitability is analyzed as a factor for mid- to long-term valuation increase.

On the 1st, NH Investment & Securities judged that from the second half of this year, with Tesla's Shanghai factory ramping up production and Volkswagen's launch of the ID.3, the global electric powertrain vehicle market will enter a long-term acceleration growth phase. Hyundai Motor Group plans to introduce the dedicated electric vehicle platform (E-GMP) from 2021. Accordingly, the mid- to long-term growth potential of Hyundai Mobis, the company responsible for core electrification components within Hyundai Motor Group, is expected.

Hyundai Mobis's consolidated sales for 2025 are projected to reach about 52 trillion KRW, with operating profit of 4 trillion KRW (operating margin 7.8%). Electrification sales, which were 2.8 trillion KRW last year, are expected to increase to about 16.3 trillion KRW by 2025, with the electrification sales ratio expanding from 7.4% to 31.4% during the same period.

Researcher Cho Su-hong stated, "With the rise in the electrification sales ratio, the company's module business segment has entered a cycle of scale expansion and profitability improvement, which should be the focus for long-term investment. The expansion of the electrification business is expected to drive Hyundai Mobis's consolidated sales growth."

Researcher Cho added, "When calculating the target price, rather than short-term profit volatility, we apply an appropriate PBR considering asset value and return on equity (ROE) to reflect mid- to long-term growth prospects. Hyundai Mobis's target price is calculated at 290,000 KRW based on 2021, and 400,000 KRW considering earnings forecasts through 2025."