[Click eStock] Hallaholdings Turns to Deficit Year-on-Year Due to Mando's Poor Performance

2Q Operating Loss of 19.1 Billion KRW... Impact of Mando and Mando Hella's Poor Performance Unavoidable
"Aiming for a Rebound through Growth in Independent Business and Recovery of Key Affiliates' Earnings"

[Asia Economy Reporter Minwoo Lee] Halla Holdings posted sluggish results in the second quarter of this year. The poor performance of its core subsidiaries Mando and Mando Hella due to the novel coronavirus disease (COVID-19) impacted the company's overall operating profit decline. However, with improvements seen in its own business and construction sectors, and expectations for future performance recovery of Mando and Mando Hella, a rebound in the second half of the year is anticipated.

On the 19th, Ebest Investment & Securities maintained a 'Buy' rating and a target price of 40,000 KRW for Halla Holdings for these reasons. Halla Holdings announced that it recorded consolidated sales of 112.9 billion KRW and an operating loss of 19.1 billion KRW in the second quarter of this year. Compared to the same period last year, sales dropped by 44%, and operating profit of 13 billion KRW turned into a loss. This is attributed to the poor performance of core subsidiaries Mando and Mando Hella amid the automotive industry downturn caused by COVID-19. However, Mando Hella showed a recovery pace in the Chinese market that exceeded the overall automotive industry's rebound speed. Mando is also showing signs of recovery as of June.

There is also analysis that its own business is gaining a foothold. The company has set a mid-to-long-term goal of achieving 1 trillion KRW in sales and a 5% operating profit margin by 2025, focusing on increasing non-affiliated company sales, which currently stand at about 60 billion KRW. Recently, it secured new growth engines by partnering with Bemycar, which owns 45,000 shared vehicles, based on data from 15 insurance companies. The module business also expanded its sales share to 5% in the second quarter due to growth from overseas clients.

Yoo Ji-woong, a researcher at Ebest Investment & Securities, said, "The operating profit of the own business recorded 3.3 billion KRW, with an operating profit margin of 2.6%, indicating an improved business structure." He added, "As a holding company, its corporate value heavily depends on its subsidiaries Mando, Mando Hella, and Halla, but profits based on its own business will contribute to forming core corporate value in the mid-to-long term."