[Click eStock] Elevator Demand Is Increasing

[Asia Economy Reporter Hwang Junho] Daishin Securities maintained its 6-month target stock price at 53,000 KRW following Hyundai Elevator's earnings conference call on the 8th. Although the earnings fell short of expectations, the company viewed the possibility of improved performance positively due to increased construction demand.

Hyundai Elevator's standalone sales last year amounted to 1.5 trillion KRW, a 4.3% decrease compared to the previous year, while operating profit shrank by 2.8% to 140.4 billion KRW. This was a result of government regulations such as the price ceiling on pre-sale apartments, which affected the economic downturn and delays in pre-sale schedules.

Last year, replacement demand exceeded new installations. Sales from replacement demand reached 311.4 billion KRW, an increase of 61.2%. This year, due to the replacement demand for elevators installed during the high-rise apartment construction boom in the 1990s, sales are expected to expand by 30.3% to 405.9 billion KRW.

The outlook for the new installation market and maintenance market is also positive. Domestic construction company pre-sales decreased in 2019 but increased in 2020. Since the elevator market typically has a 6 to 12-month lag from construction company pre-sales to orders, the increased demand last year is expected to be reflected in this year's performance.

Accordingly, this year's standalone earnings guidance is estimated at 1.7 trillion KRW in sales and 161 billion KRW in operating profit. This represents an increase of 15.1% in sales and 14.7% in operating profit.