[Click eStock] "Iljin Hysolus Expected to Return to Loss This Year... Target Price Downgraded"

Shinhan Investment Corp. forecasted on the 16th that Iljin Hysolus will record a turnaround to a deficit this year and lowered the target stock price to 28,000 KRW. The investment opinion of 'Buy' was maintained.

On the day, Kyuheon Choi, a researcher at Shinhan Investment Corp., said, "This year, Iljin Hysolus's total sales are expected to decrease by 37% compared to last year to 68.4 billion KRW, and operating loss will turn to a deficit of 3.3 billion KRW," adding, "The main reasons for the deficit turnaround are the sluggish volume in the passenger car sector, including Nexo, which accounts for more than 80% of the hydrogen business division's scale, and the fixed cost burden of the environmental business division."

The cause of the sluggish Nexo sales is cited as a lack of charging infrastructure and increased charging costs. As a buyer, the choice of hydrogen cars itself is limited, and the fact that the successor model of Nexo will be released in 2025 is also an obstacle. In addition, the hydrogen passenger car support budget (government proposal) for next year has been significantly reduced. It decreases from 16,000 units this year to 9,000 units next year. Researcher Choi analyzed, "Government support budgets have a huge impact on the growth of the initial industry. With changes in the government's hydrogen car promotion strategy, the domestic hydrogen passenger car market is likely to be formed at a level below 10,000 units for the time being."

However, the rapid growth of the domestic hydrogen bus market is a positive factor. This year, the hydrogen business division's sales in commercial and other sectors are expected to reach 25.2 billion KRW, a 54% increase from last year. The annual hydrogen bus budget volume has been increasing significantly with 180 units in 2021, 340 units last year, 700 units this year, and 1,720 units next year (government proposal).

Researcher Choi said, "While the annual hydrogen consumption of hydrogen passenger cars is about 200 kg, hydrogen buses consume at least 5,000 kg or more," adding, "Charging infrastructure only needs to be established at transportation hubs. Increased utilization rates will enable profitability recovery, which will create a virtuous cycle of additional charging infrastructure construction and hydrogen bus expansion." He also added, "Ultimately, accelerating growth through securing large overseas customers is necessary," and "If securing large customers becomes visible, a dramatic performance turnaround exceeding market expectations will begin."