[Click eStock] "Hyosung Heavy Industries, Full-Scale Recovery of Core Business in Second Half... New Business as a Bonus"

[Asia Economy Reporter Park Jihwan] Daishin Securities evaluated that Hyosung Heavy Industries is expected to show a clear recovery in its core business in the second half of the year, and the outlook for new businesses also appears bright. The investment opinion 'Buy' and the target price of 95,000 won were maintained.

Researcher Dongheon Lee of Daishin Securities stated, "On a consolidated basis for the second quarter, sales were 705.6 billion won and operating profit was 40.3 billion won, down 17% and 30% respectively compared to the previous year." Sales were 14% below market expectations, and operating profit was 3% below. Researcher Lee said, "The decrease in sales is due to the deferred volume in the heavy industry sector, and the profit level appears to be stable due to a one-time reversal in the construction sector."

It is analyzed that the recovery in the core business will be clear from the second half of the year. In the case of heavy industry, orders have been secured through next year's volume, and deferred volume will be fully reflected from the third quarter. Issues such as anti-dumping are also evaluated positively. Construction is expected to show an upward trend based on an increase in order backlog, with continuous acquisition of highly profitable sites and targeting niche markets.

The new business of hydrogen charging stations secured orders worth 30 billion won in the first half of the year alone. Researcher Lee emphasized, "Profitability has improved due to increased government subsidies and the enlargement of charging stations," adding, "After obtaining Korean certification for the 8MW model, domestic production is planned." The data center is currently undergoing licensing procedures after acquiring the Anyang site and is expected to start construction soon.

Researcher Lee stated, "Both heavy industry and construction are recovering, and based on next year, the price-to-earnings ratio (PER) is only about 6 times, and the price-to-book ratio (PBR) is about 0.6 times based on the core business alone," adding, "With reduced financial risk, the company is growing into a renewable power equipment provider such as hydrogen and wind power."