"Strong Buy" vs "Target Price Downgrade"... Divergent Views on Mando

66,000 KRW → 70,000 KRW
Daol Investment & Securities Raises Target Price
Names Auto Parts Stock as Top Pick

On the Same Day, KB Securities Lowers Target to 50,000 KRW
Due to Ongoing Raw Material Cost Pressure

Mando Stock Closes Up 8.56%

[Asia Economy Reporter Kwon Jae-hee] Distinctly different stock price forecasts for auto parts maker Mando are drawing attention. Among two securities firms that released reports on the same day, one issued a 'Strong Buy' recommendation, while the other lowered its target price. Even considering that analysts may have different perspectives, it is unusual to see a divergence in investment opinions rather than just differences in target prices.

According to the securities industry on the 30th, Daol Investment & Securities (formerly KTB Investment & Securities) named Mando as their top pick among auto parts companies and raised the target price from 66,000 KRW to 70,000 KRW. The investment opinion was also set to 'Strong Buy (STRONG BUY)'.

On the other hand, on the same day, KB Securities gave Mando a 'Hold (HOLD)' rating and lowered the target price by 16.7% to 50,000 KRW. The reason for the downgrade in investment opinion was the continued burden of rising raw material costs.

On the day the conflicting reports were released, Mando's stock price closed at 49,450 KRW, up 8.56% from the previous trading day. It continued to rise in the morning, surpassing 50,000 KRW.

The stock price increase was driven by expectations that the company's first-quarter earnings this year would exceed market forecasts, along with interpretations that Mando has the most differentiated earnings momentum among parts makers.

Yoo Ji-woong, a researcher at Daol Investment & Securities, said, "Mando's operating profit for the first quarter is expected to exceed market forecasts by 15%. Despite the COVID-19 pandemic and the Russia-Ukraine conflict, the production recovery of Mando's main customers, Hyundai Motor, Kia, and global electric vehicle companies, is clear. Moreover, global EV companies officially started operations at new plants located in Germany and the United States from April this year, which has increased the sales visibility for existing parts suppliers."

He added, "In particular, Mando's sales proportion in Europe, which is affected by the Ukraine situation, is minimal at around 4%. Also, compared to Hyundai Mobis and Hyundai Wia, which are impacted by the production halt of Hyundai Motor's Russian subsidiary, Mando has a relatively favorable structure in terms of profit securing."