[Click eStock] "SNT Motive, Motor Sales Diversification Needed... Target Price Down 11.8%"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating on SNT Motive on the 30th, while lowering the target price by 11.8% to 60,000 KRW.

The third-quarter performance of SNT Motive is expected to hold up well due to favorable exchange rates and increased orders from clients. Operating profit is estimated at 27 billion KRW, representing a 35.2% growth compared to the same period last year. With an export ratio of about 80%, the company benefits significantly from the rise in the KRW-USD exchange rate. Balanced growth across all business divisions is anticipated in the third quarter.

The motor division, which accounts for over 40% of sales and has become the largest segment, is expected to see sales increase by approximately 39%, driven by increased sales of Hyundai Kia’s eco-friendly vehicles and the resumption of production of Chevrolet’s electric vehicle Bolt. The vehicle division is projected to see a 15% sales increase, supported by a 46.1% year-on-year increase in GM’s global production volume in July and August. The special business division, including defense, is expected to grow sales by 37% due to seasonality.

With the full-scale resumption of Bolt production, SNT Motive’s motor sales are expected to rise. SNT Motive supplies electric vehicle drive systems to the Bolt. This system integrates the drive motor, reducer, and inverter into one component and, along with the battery, is a core part of electric vehicles. Previously, Bolt production was halted from September last year due to a battery recall. Jinwoo Kim, a researcher at Korea Investment & Securities, stated, “Bolt’s motor sales were unusually impacted in the third quarter last year, but with production resuming from April this year, the growth trend in motor sales is expected to continue.”

However, expanding the customer base for motor sales is essential for sales growth. Researcher Jinwoo Kim said, “Although sales of hybrid starter motors and drive motors supplied to Hyundai Kia and GM are increasing, it is regrettable that there are no sales yet for drive motors dedicated to electric vehicle platforms such as Hyundai Kia’s E-GMP or GM’s Ultium,” adding, “Considering the rise in interest rates and the slow expansion of motor customers, we have lowered the target price.”