[Click eStock] Mando Accelerates Autonomous Driving... Profitability Trapped in a Box Range Increases

[Asia Economy Reporter Lee Seon-ae] Korea Investment & Securities announced on the 3rd that it maintains a buy rating and a target price of 92,000 KRW for Mando, citing improvements in profitability.

On the 2nd, Mando held an Investor Day to present its mid- to long-term vision for electric vehicles and autonomous driving. Mando's consolidated sales targets are set at 6 trillion KRW in 2021, 7 trillion KRW in 2023, and 9.6 trillion KRW in 2025. The proportion of electronic components among these is 62%, 66%, and 69%, respectively. The share of eco-friendly vehicles is 20%, 26%, and 33%. Eighty percent of the 2025 sales target is already secured through orders, making achievement highly visible. The cumulative order backlog at the end of Q3 is 45 trillion KRW, of which 53% is from non-Hyundai-Kia clients and 20% from BEV companies.

Detailed information was also shared regarding the business plan of HL Clemoove, which was newly launched in December. HL Clemoove is an autonomous driving and mobility specialized company (100% owned by Mando) formed by the physical division of Mando's autonomous driving business unit and Mando's affiliate (Mando Hella). HL Clemoove is responsible for perception and decision-making in autonomous driving, while Mando handles the driving components. To this end, HL Clemoove plans to upgrade sensors, control systems, and software algorithms. HL Clemoove aims to increase sales through diversification (volume expansion) and advancement (price increase) of autonomous driving products, targeting 1.2 trillion KRW in 2021, 2.4 trillion KRW in 2026, and 4 trillion KRW in 2030.

The timeline to reach full and driverless autonomous driving levels 4 and 5 is taking longer than expected, leading to increased demand for level 2 to 3 autonomous driving. For parts suppliers to improve profitability, the only way is to sell new products to new customers. Mando plans to enhance Advanced Driver Assistance Systems (ADAS) through HL Clemoove to address levels 2 to 3 autonomous driving. This will expand its customer base and improve profitability. Jinwoo Kim, a researcher at Korea Investment & Securities, emphasized, "Within the order backlog, products and customers have already diversified. As orders are recognized as sales, profitability, which has been trapped in a box range for the past decade, is expected to improve."