[Click eStock] "Hyundai Corporation's Performance Normalization on Track... Limited Impact of Logistics Costs"

[Asia Economy Reporter Myeonghwan Lee] Hana Financial Investment announced on the 26th that it expects Hyundai Corporation's fourth-quarter performance last year to improve, maintaining a buy rating and a target price of 25,000 KRW.

Hyundai Corporation is a comprehensive trading company under Hyundai Motor Group, trading and distributing products such as transformers, plants, ships, automobiles, steel, and chemicals.

Researcher Yu Jaeseon of Hana Financial Investment diagnosed that Hyundai Corporation is normalizing its performance through external growth and profit margin recovery. The company's fourth-quarter sales in 2021 are expected to be 1 trillion KRW, with an operating profit of 11.1 billion KRW. These figures represent increases of 61.3% and 75.4%, respectively, compared to the previous year. The operating profit margin is expected to slightly improve to 1.1% compared to the previous quarter.

This is due to the recovery of customer demand and the effect of rising product prices driven by strong raw material prices. Significant growth is expected in key sectors such as steel, petrochemicals, and passenger car parts.

Although logistics costs have increased recently due to logistics difficulties, Hana Financial Investment's analysis suggests that the impact on performance will be limited. Researcher Yu said, "Concerns about rising logistics cost burdens may arise as container freight rates increase again," but added, "Since logistics costs can be passed on through price adjustments and profits can be recovered, the impact on performance is expected to be limited."

This year, the company is expected to achieve meaningful growth as it recovers from the effects of COVID-19. Researcher Yu analyzed, "If logistics normalize, not only will transportation cost burdens ease, but improvements in petrochemical trading performance are also expected due to increased volumes of aviation fuel and bunker fuel trading," and added, "Considering the 2021 performance base, meaningful growth can be expected in 2022 as well."