[Click eStock] "CS Wind, Margin Decline Due to Cost and Fixed Expense Burden"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained its buy rating and target price of 90,000 KRW for CS Wind on the 12th. Although margins have decreased due to cost and fixed expense burdens, it is expected to maintain a growth trend in the long term through increased orders and rising sales prices.

First-quarter sales reached 309.8 billion KRW, a 28% increase compared to the previous year. The inclusion of results from the US and Portugal subsidiaries acquired last year enabled this external growth. Operating profit was 8.5 billion KRW, down 73% year-on-year. The profit margin was 2.7%, the lowest level since 2018.

Yoo Jae-sun, a researcher at Hana Financial Investment, explained, “Costs increased due to the rise in fixed expenses of new subsidiaries and raw material prices,” adding, “As production volume increases in the second half, the fixed cost burden will ease, enabling a performance turnaround.” However, depreciation expenses are expected to reflect about 3 billion KRW quarterly for the next five years due to increased facility investments. Pre-tax profit turned to a loss compared to the previous year due to exchange rate effects.

In the short term, since transportation cost burdens have not been completely resolved, it is predicted that orders for Europe and the Americas from Southeast Asian subsidiaries, where cost management is easier, will not improve rapidly. However, a long-term upward trend is expected.

Researcher Yoo analyzed, “Considering that prices of steel products in Europe and North America are relatively high due to increases in major raw material prices and utility costs, there is significant potential to secure price competitiveness in the future,” and added, “Taking into account major trends and events such as the accelerated European energy transition and the passage of North American infrastructure bills, long-term growth potential remains valid.”