[Click eStock] "Hyundai Mobis, Slow Margin Improvement... Momentum Expected in the Second Half"

Ebest Investment "Target Price Lowered to 400,000 Won"
Momentum Expected in Q3 Aligned with Vehicle Sales Cycle

[Asia Economy Reporter Gong Byung-sun] An analysis has emerged that Hyundai Mobis's margin improvement will begin to appear from the third quarter of this year. The basis for this analysis is that the module business is progressing slowly and the vehicle sales cycle is aligned with the third quarter.

On the 13th, Ebest Investment & Securities lowered the target price for Hyundai Mobis from 440,000 KRW to 400,000 KRW, while maintaining a 'Buy' rating. Ebest Investment & Securities stated that they applied a price-earnings ratio (PER) of 12.5 times for this year's target price calculation.

This year, Hyundai Mobis's module business is expected to see slower margin improvement compared to the after-sales service division. The after-sales service division is projected to show a recovery trend from the second quarter of this year due to increased mobility demand, but research and development in the electrification sector remains concentrated, causing slow progress in the module business. Additionally, sales of key components such as infotainment and Advanced Driver Assistance Systems (ADAS) will begin to increase significantly only in the second half of the year.

Yoo Ji-woong, a researcher at Ebest Investment & Securities, said, "The electrification business is expected to see the full-scale production of Hyundai Motor's electric vehicle Ioniq 5 delayed by about one month compared to expectations, while production of existing derivative electric vehicles will remain stagnant." He added, "Due to the vehicle sales cycle, margin improvement is expected to appear from the third quarter of this year." Furthermore, he said, "Corporate value is also expected to recover in the second half of the year, although it will be sluggish in the first half."

Hyundai Mobis's sales and operating profit for the first quarter of this year are expected to be 9.5 trillion KRW and 569.3 billion KRW, respectively. The operating profit falls short of the market expectation of 634 billion KRW. Researcher Yoo explained, "The volume of the combined finished vehicle factory delivery method increased by 14% compared to the same period last year, but the volume growth was mainly driven by Beijing Hyundai Motor Company (BHMC). Regarding the after-sales service business, a temporary margin deterioration appears to have occurred due to an unfavorable exchange rate environment and the initial operation of the parts supply management system 'MAPS' at the beginning of the year."