[Click eStock] "Hyundai AutoEver, Earnings Momentum Strengthens from Q2... Investment Opinion 'Buy'"

On the 11th, Kiwoom Securities upgraded its investment opinion on Hyundai AutoEver from outperform (exceeding market returns) to buy, stating, "From the second quarter of this year through the second half, the profit growth momentum will strengthen. Even if the first quarter records moderate earnings, the possibility of the stock price rising in the second quarter is not a major concern." The target price was maintained at 215,000 KRW.

On the same day, Shin Yoon-chul, a researcher at Kiwoom Securities, said, "The second quarter of last year was a period when Hyundai AutoEver's stock price rebounded significantly as the growth potential from the smart factory new business was emphasized at the 2023 CEO Investor Day. Although there is no event scheduled for the second quarter this year, it is expected that the effectiveness of smart factory solutions will be emphasized once again through Hyundai Motor and Kia's 2024 CEO Investor Day."

He added, "The completion timing of major pure battery electric vehicle (BEV) dedicated plants supplied with smart factory solutions, such as Hyundai Motor Group's electric vehicle-only plant in Georgia, USA (HMGMA), Hyundai Motor's Ulsan plant, and Kia's Gwangmyeong plant, will come one after another starting from the second half of this year. Since revenue recognition in the enterprise IT (information technology) sector due to supply is also expected to begin in earnest from the second half, this is expected to serve as a basis for the company to attract attention."

This year's first-quarter earnings are expected to meet market expectations with sales of 747 billion KRW and operating profit of 36.1 billion KRW, representing growth of 12.2% and 18.1% respectively compared to the same period last year. The SI (system integration) sector is expected to continue its growth trend centered on the ITO (IT outsourcing) enterprise IT sector in the first quarter, following concentrated growth from 2021 through last year.

Researcher Shin analyzed, "From the second quarter through the second half, the earnings momentum will strengthen," adding, "Investment in the generational replacement of in-vehicle navigation will be completed in the first half, and especially, the Mobilgene product line, which has been cited as a factor deteriorating profitability in the vehicle software sector, has entered the visible range of a structural turnaround to profitability due to expanded customer demand following the launch of Mobilgene Classic 2.0."

He also added, "Since supply price negotiations for the enterprise IT sector, reflecting wage increase plans, are conducted every second quarter, profit and loss improvement in the second quarter could accelerate beyond expectations depending on the negotiation results."