[Click eStock] "Hyundai Wia Actively Reflects Future Value... Significant Performance Improvement in Second Half"

Current Stock Price Actively Reflects Future Value

[Asia Economy Reporter Minwoo Lee] There is a forecast that Hyundai Wia's performance will improve significantly in the second half of the year. However, it is analyzed that since the future value is already actively reflected in the stock price, the additional upward momentum may be somewhat lacking.

On the 29th, Eugene Investment & Securities predicted that Hyundai Wia will record sales of 1.852 trillion KRW and an operating profit of 46 billion KRW in the second quarter of this year. Compared to the same period last year, sales are expected to increase by 52.6%, and operating losses are expected to turn into profits. Researcher Jaeil Lee of Eugene Investment & Securities explained, "Due to the global economic recovery, demand for general-purpose machine tools has greatly increased, and the order margin rate has improved due to a decrease in supply volume. Although module sales in the vehicle sector decreased, the volume of four-wheel drive and constant velocity joints increased, improving profitability."

It is forecasted that performance will improve significantly in the second half of the year. Currently, the order situation for machine tools is good, but parts supply is not smooth. It is analyzed that performance will steadily improve until 2022 due to an increase in order backlog. The factory automation sector is also expected to play a role as a mid- to long-term growth engine with Hyundai Motor and Kia's investment in electric vehicle production facilities and the expansion of smart factory introduction projects. The researcher said, "Although the product mix in the vehicle parts sector has improved, it is necessary to consider the volume reduction effect caused by the disruption in the supply of automotive semiconductors. Since the shortage has been resolving since May, the vehicle sector is also expected to have strong upward momentum in performance in the second half of the year."

However, the stock price is judged to be somewhat burdensome. Eugene Investment & Securities maintained the target stock price at 92,000 KRW but downgraded the investment opinion from Buy to Hold. The closing price the previous day was 103,000 KRW. The researcher explained, "Currently, the price-to-earnings ratio (PER) based on this year is trading at 16.3 times, and 14.4 times in 2022, which is undervalued compared to the world's top-tier electronic parts companies but is trading at a premium compared to Hyundai Wia's historical corporate value. The supply timing of the thermal management system for electric vehicles is 2023, so the current stock price is judged to actively reflect future value."