Hana Securities on the 24th raised the target price for HD Hyundai Electric from the previous 140,000 KRW to 280,000 KRW, doubling it, stating that the company achieved better-than-expected results even during the first quarter's off-season. The investment opinion 'Buy' was also maintained.
HD Hyundai Electric recorded sales of 801 billion KRW in the first quarter, a 40.9% increase compared to the previous year. Operating profit for the same period reached 128.8 billion KRW, a 178.2% increase.
Researcher Yoo Jae-sun said, "The first quarter results exceeded market consensus," adding, "As of the end of the first quarter of 2024, new orders amounted to $1.44 billion, and the order backlog was $5.08 billion."
Researcher Yoo explained, "Despite the off-season, early recognition of sales from Energy Storage Systems (ESS) led to favorable results across all sectors. Power equipment saw strong performance in the North American and Middle Eastern markets, along with sales expansion in domestic and European markets. Distribution equipment growth was supported by PAD transformers, and rotating equipment sales increased due to shipbuilding and eco-friendly project products."
He further analyzed, "The scope of one-time gains, such as reversals of provisions for long-term receivables at headquarters and the China subsidiary, reversals of inventory provisions, and lower-than-budgeted material costs, is estimated to be around 15 billion KRW. The rise in the KRW-USD exchange rate also appears to have had a positive impact."
He added, "The order backlog sharply increased as some large-scale projects in the Americas and Middle East, which were underway at the end of 2023, were reflected in first-quarter orders. Since delivery times are lengthening due to long-term supply contracts, concerns about upstream demand are limited."
He continued, "Although the KRW-USD exchange rate is fluctuating rapidly, it remains in a favorable range. The recent rise in copper prices may affect margins in the second half with a time lag, but the medium- to long-term profit margin trend is likely to continue its gradual upward trajectory."
Based on 2024 estimates, the price-to-earnings ratio (PER) was presented at 22.9 times, and the price-to-book ratio (PBR) at 6.2 times.
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