Ebest Investment & Securities Report
[Asia Economy Reporter Gong Byung-sun] Ebest Investment & Securities raised the target price of Mando from 90,000 KRW to 110,000 KRW on the 4th, despite the company's fourth-quarter earnings last year falling short of market expectations, as global orders are expected to ramp up this year. The investment rating was maintained at 'Buy.'
Mando recorded sales of 1.74 trillion KRW and an operating profit of 80.4 billion KRW in the fourth quarter of last year, both below market expectations. However, approximately 15 billion KRW in bad debt provisions from Ssangyong Motor and Sacheon Motor were reflected in the operating results; excluding these, operating profit was about 95.4 billion KRW. Margin improvements are also expected to have expanded in the domestic, Indian, and Chinese markets in the fourth quarter, following the third quarter of last year.
Mando officially began global order acquisition by announcing the signing of a Stock Purchase Agreement (SPA) for 100% of the shares of Mando Hella Electronics (MHE) the day before. MHE is a supplier of Electronic Control Units (ECU) and Advanced Driver Assistance Systems (ADAS) sensors, with an acquisition price of 165 billion KRW.
Yoo Ji-woong, an analyst at Ebest Investment & Securities, explained, "This acquisition is expected to improve this year's operating profit margin by 0.2% in the short term," adding, "Diversification of client companies is also one of the anticipated benefits."
In particular, expansion into the European region is expected. Through this equity acquisition, Mando can now secure orders for previously restricted technologies in key Original Equipment Manufacturer (OEM) regions such as Europe. The technologies to be ordered include 24GHz radar, ADAS, and active safety systems. Analyst Yoo said, "We have re-evaluated the potential growth significantly increased due to the full-scale start of European orders."
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