[Click eStock] "Hyundai Corporation Holdings, Q4 Earnings Recovery Expected"

[Asia Economy Reporter Park Jihwan] Hyundai Motor Securities forecasted on the 16th that Hyundai Corporation Holdings' third-quarter performance this year was sluggish, but it is expected to show a recovery trend in the fourth quarter. The investment opinion 'Buy' and the target stock price of 21,000 won were maintained.

Park Jongryeol, a researcher at Hyundai Motor Securities, said, "The third-quarter performance fell significantly short of the initial forecast due to sluggishness across all business divisions," and added, "In the fourth quarter, operating profit is expected to recover significantly by compensating for the previous quarter's sluggishness along with sales growth, driven by normalization of operating profit in the brand business and a rebound in the imported meat and other business divisions due to the With-Corona policy."

It is analyzed that a solid performance momentum will continue next year as well, with a gradual recovery in the imported meat business, steady profit growth in the brand division, and a reduction in losses in other divisions.

On a consolidated basis, third-quarter sales amounted to 33.4 billion KRW, down 7.5% year-on-year. Operating profit for the same period was 1.7 billion KRW, a decrease of 43.3%. Both results were disappointing and fell short of initial forecasts. Researcher Park said, "The overall scale decreased significantly more than initially expected as the meat business (imported meat distribution), which accounts for the largest sales proportion, was hit by reduced demand for gatherings and dinners due to the ongoing COVID-19 pandemic," and added, "The main reason for the operating profit shortfall was that the brand business underperformed initial expectations."

However, in the fourth quarter, consolidated sales are expected to increase by 5.5% year-on-year to 31.2 billion KRW, and operating profit is expected to rise by 198.2% to 3.6 billion KRW. It is analyzed that the company will record a favorable performance that compensates for the third-quarter slump. Researcher Park stated, "The brand business is expected to overcome the temporary slump in the third quarter and generate operating profit at a normal level," and added, "Both the meat business and other businesses are expected to recover from the third-quarter slump due to the With-Corona policy."

He emphasized, "The solid performance trend is expected to continue next year as well, with a gradual recovery from the impact of COVID-19 and a recovery in the scale of the imported meat division, leading to steady growth in overall sales."