Hyundai Corporation, Will Growth Continue in Q4?

Expected Performance in Line with Consensus for Q3 This Year
Hana Financial Investment "Maintains Hyundai Corporation Target Price at 25,000 Won"

[Asia Economy Reporter Gong Byung-sun] Hyundai Corporation's third-quarter performance this year is expected to meet market consensus, supported by strong order intake. Stable growth is also anticipated in the fourth quarter based on existing orders.

On the 24th, Hana Financial Investment estimated Hyundai Corporation's third-quarter sales to be 1 trillion KRW, a 54.1% increase compared to the same period last year, and operating profit to be 11 billion KRW, up 23.6% year-on-year. These figures align with the consensus estimates of 958.4 billion KRW in sales and 10.9 billion KRW in operating profit, respectively.

The recovery in demand from major clients appears to have a positive impact on performance. Demand is increasing in sectors such as finished vehicles and steel manufacturers, and significant growth is expected in petrochemicals and passenger car parts, which hold a high proportion.

The strong raw material prices are also a positive factor. As raw material prices rise, product prices have increased, normalizing profit margins. Although costs have increased recently due to rising freight rates, the contribution from high-margin large orders is also growing. Yoo Jae-sun, a researcher at Hana Financial Investment, said, "The logistics burden is an environment that is difficult to completely resolve," but added, "Overall profit margin is expected to slightly improve to 1.0% compared to the previous quarter."

Profit growth is expected to continue in the fourth quarter as well. Order volume still contributes to growth. Researcher Yoo explained, "Although there are concerns about a decline in raw material prices, performance is expected to remain stable based on existing orders," and added, "Related risks may also be resolved as logistics disruptions ease and demand recovers."

Accordingly, Hana Financial Investment maintained its investment opinion of 'Buy' and a target price of 25,000 KRW for Hyundai Corporation. The closing price on the 22nd was 19,100 KRW.