[Click eStock] "Hyundai Energy Solutions, Beneficiary of Energy Security"

[Asia Economy Reporter Kwon Jae-hee] Hi Investment & Securities analyzed on the 30th that "the importance of solar power generation is highlighted from the perspective of energy security, and a rapid earnings turnaround is expected" for Hyundai Energy Solutions. No investment opinion was provided.

Hyundai Energy Solutions recorded consolidated sales of 176.1 billion KRW and operating profit of 7.7 billion KRW in the first quarter of this year. This represents a significant improvement with increases of 95.4% and 393.1% respectively compared to the same period last year. The improvement in profitability was due to increased sales from higher module sales volume and price hikes in domestic and European markets.

Above all, the core of the earnings improvement is interpreted as the growth momentum in the European and Australian regions. Sales in Europe and Australia were only 52 billion KRW in 2020 but surged to 228.2 billion KRW in 2021. Continuous new customer acquisition and strengthened marketing efforts contributed to the sales increase, with sales in the fourth quarter of last year alone reaching 95.5 billion KRW.

In particular, Hyundai Energy Solutions recorded sales of 100.7 billion KRW in the European and Australian regions in the first quarter of this year, accounting for the largest share of 57% of total sales.

Going forward, the improvement in the economic feasibility of solar power generation is expected to lead to increased demand, benefiting Hyundai Energy Solutions. The achievement of global carbon neutrality and rising generation costs of coal and gas power plants are expected to enhance the economic feasibility of solar power generation with lower generation costs compared to other power sources, leading to increased solar power demand.

Additionally, strong solar power demand in the US and Chinese markets is expected to continue this year, while in Europe, solar power demand is expected to steadily increase due to soaring generation costs caused by rising gas prices and the growing importance of solar power generation from an energy security perspective.

Lee Sang-heon, a researcher at Hi Investment & Securities, said, "Hyundai Energy Solutions, a solar module specialist affiliated with Hyundai Heavy Industries Group, supplies various products not only domestically but also to the US, Japan, Europe, and Australia," adding, "The European market is expected to lay the foundation for Hyundai Energy Solutions' sales growth and accelerate the earnings turnaround."

He continued, "Above all, the rise in raw material prices is expected to sustain strong product prices for solar modules, contributing to earnings improvement."