[Click eStock] Hyundai Wia, Performance Improvement Continues but Neutral Opinion Maintained

[Asia Economy Reporter Lee Seon-ae] Korea Investment & Securities announced on the 27th that it maintains a neutral investment opinion on Hyundai Wia. No target price was presented. This is based on the judgment that although earnings improvement continues, valuation appeal is limited.

Hyundai Wia's earnings were expected to continue losses in the machinery division, but despite a reduction in machinery sales, it recorded profits for two consecutive quarters thanks to an improved mix. Although the sales scale decreased, the quality of orders improved. Vehicle parts also saw profitability rise more than expected due to increased sales of luxury cars such as Genesis and SUVs. Jinwoo Kim, a researcher at Korea Investment & Securities, emphasized, "Although the earnings improvement trend continues, the 2023 price-to-earnings ratio (PER) is at about 9.6 times, so the potential for further increase is limited," and maintained a neutral opinion.

Hyundai Wia's second-quarter sales amounted to 1.9718 trillion KRW, a 0.4% decrease compared to the previous year. Operating profit was 53.1 billion KRW, up 17.6% year-on-year. Net profit was 209.5 billion KRW, an increase of 453.3%.

Meanwhile, Hyundai Wia confirmed performance improvements in the integrated thermal management system for electric vehicles under development and plans to supply the system to finished vehicles by 2027. The machinery division plans to continue efforts to improve its structure in the second half of the year by reducing long-term inventory and minimizing discount sales, thereby improving the profitability structure of general-purpose machines. The FA (Factory Automation) business will be transformed into a smart manufacturing solutions business, and detailed investment plans related to group electrification and future vehicle businesses will be disclosed in the second half of the year.