2Q Operating Profit Up 234% YoY but Misses Expectations by 6%
Stock Continues to Decline... "Hoping for Increased EV Production in 2H"
[Asia Economy Reporter Minwoo Lee] Hyundai Mobis is showing signs of stagnation in both its performance and stock price. It is evaluated that the increase in transportation costs and production disruptions at client companies such as Hyundai Motor and Kia have had an impact. However, there is an analysis that growth can be achieved from the second half of the year as client companies' finished vehicle production recovers and sales of electrification parts expand.
According to the Financial Supervisory Service's electronic disclosure system on the 26th, Hyundai Mobis recorded provisional consolidated sales of 10.2851 trillion KRW and operating profit of 563.6 billion KRW in the second quarter of this year. These figures represent increases of 37% and 234%, respectively, compared to the same period last year. Nevertheless, the operating profit fell about 6% short of the market consensus forecast of 597.6 billion KRW, indicating a performance below expectations.
The stock price is also showing sluggish performance. As of 11:23 AM on the day, it recorded 272,500 KRW, down 2.50% from the previous day. It had risen to 405,000 KRW on January 11, surpassing the 400,000 KRW mark for the first time in 10 years since 2011, but has been on a downward trend this year. Since April 21, it has rarely exceeded 300,000 KRW.
The increase in transportation costs is cited as a major cause of the decline in performance. Due to COVID-19, both maritime and air transportation costs have risen, increasing expenses by 27 billion KRW in modules and 30 billion KRW in the A/S (after-sales service) sector. Maritime freight rates continued to rise in the second quarter of this year, and the proportion of urgent air transportation increased in response to the semiconductor supply shortage, causing a double burden. Production disruptions at client companies such as Hyundai Motor and Kia also led to poor performance. In particular, the shortage of automotive semiconductors and supply disruptions of drive motors delayed the production of dedicated electric vehicles, slowing the sales growth of Hyundai Mobis's electrification business.
It is expected that significant performance improvement will be possible from the fourth quarter of this year. This is because the production volume of client companies is expected to return to normal from the fourth quarter when the automotive semiconductor supply shortage is anticipated to be resolved. Since Hyundai Motor and Kia are underperforming in China, it seems that it will still take some time for Hyundai Mobis's Chinese subsidiary sales to rebound. Researcher Seunghwan Lee of Daishin Securities explained, "From the second half of the year, sales of dedicated electric vehicles by Hyundai Motor and Kia are expected to accelerate, and the medium- to long-term growth potential of Hyundai Mobis, a core parts supplier, will also begin in earnest from the second half of the year," adding, "There are also plans to internalize vehicle software (SW) and semiconductors, which is expected to increase corporate value."
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