[Click eStock] Hyosung Heavy Industries, Heavy Industry Performance Improvement Begins 'Turnaround This Year'

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 7th that it maintains a buy rating and a target price of 83,000 KRW for Hyosung Heavy Industries.

The target price is based on a 12-month forward earnings per share (EPS) of 9,993 KRW and a target price-to-earnings ratio (PER) of 8.3 times. The PER reflects the average of comparable companies in the power and construction sectors. Lee Dong-heon, a researcher at Daishin Securities, explained, "This reflects the turnaround in the power sector and the downward valuation adjustments of comparable companies in the construction industry."

The fourth-quarter 2021 results are expected to show sales of 939.1 billion KRW (+12% yoy) and operating profit of 37.9 billion KRW (+78% yoy), with sales slightly below consensus by 2% and operating profit exceeding consensus by 7%, indicating solid performance.

In particular, the heavy industry segment began a strong recovery starting in the fourth quarter. The construction segment also started gradual expansion in scale.

The researcher emphasized, "Hyosung Heavy Industries' stock price also declined due to Hyundai Motor's suspension of its hydrogen project. However, since this is not significantly linked to the company's improving performance phase, only the stock price has changed so far, and a turnaround is expected in 2022 starting with the improvement in heavy industry performance."