[Click eStock] "Mando, Sustained Solid External Growth"

[Asia Economy Reporter Kwon Jae-hee] Daishin Securities maintained its 'Buy' rating and target price of 65,000 KRW for Mando on the 30th.

Mando's sales for the third quarter of this year are expected to slightly exceed market consensus of 1.8 trillion KRW and 70.9 billion KRW, with sales of 1.9 trillion KRW and operating profit of 73.3 billion KRW. Sales growth is expected to remain solid due to improved operating rates of Hyundai-Kia Motors, Chinese local OEMs, and North American battery electric vehicle (BEV) companies, which account for 75% of sales, as well as the effect of the KRW-USD exchange rate. Operating profit is expected to improve by 1.1 percentage points year-on-year due to operating leverage effects from improved customer volumes, despite some cost burdens continuing due to exchange rate increases.

Stable trends are expected to continue in the mid to long term. Sales volume of North American BEV companies increased by 42% year-on-year to 1.4 million units this year. It is expected to increase to 1.7 million units next year. Mando is estimated to be able to handle customer volumes up to about 2.7 million units, which is expected to provide a more stable volume flow compared to other parts suppliers. Although there is no set plan regarding funding for HL Clemoove, it is judged that related issues are likely to emerge as the business becomes full-scale.

Kim Gwi-yeon, a researcher at Daishin Securities, analyzed, "Additional upside is possible, but considering global macro uncertainties, we maintained a conservative target price," adding, "Based on 2022, the PER is 11.4 times and PBR is 1 time, so valuation pressure is limited."