[Click eStock] "HD Hyundai, Subsidiary Marine Solution's Equity Value Increases"

Hyundai Marine Solution Surpasses Expected Post-IPO Gains
Short-Term Supply and Demand Factors...Share Value Reflection Deferred
Operating Profit Expected to Increase 88% Year-on-Year This Year

Daishin Securities analyzed on the 23rd that HD Hyundai's stake value increased due to the recent stock price rise of its newly listed subsidiary, HD Hyundai Marine Solutions. They maintained a 'Buy' investment rating and a target price of 90,000 KRW. HD Hyundai closed at 67,100 KRW on the previous trading day.

Researchers Yang Ji-hwan and Lee Ji-na from Daishin Securities stated, "Since the listing of HD Hyundai Marine Solutions, its stock price has risen more sharply than expected," adding, "Reflecting this, the target price could be raised to around 100,000 KRW, but since the current stock price of HD Hyundai Marine Solutions is considered to be driven by short-term supply and demand factors rather than fundamental factors, we are withholding the reflection of the increased stake value."

HD Hyundai is the holding company of the HD Hyundai Group. Its consolidated operating profit for 2024 is estimated to be approximately 3.8 trillion KRW, expected to increase by more than 88% compared to the previous year. Researchers Yang Ji-hwan and Lee Ji-na explained, "This is due to improved performance of most consolidated subsidiaries, including shipbuilding, refining, electric, and marine solutions," and added, "Despite the stock price rise of listed subsidiaries and the increase in net asset value (NAV) due to the listing of unlisted subsidiaries, HD Hyundai's stock price continues to trade within a range of 60,000 to 75,000 KRW." The main reason for the undervaluation is the rooftop governance structure, where the intermediate holding companies Korea Shipbuilding & Offshore Engineering and Hyundai Site Solutions serve as intermediate holdings."

HD Hyundai plans to implement a policy of distributing more than 70% of its separate net income as dividends from 2023 to 2025. Dividend income from subsidiaries, which serves as the source of dividends, is expected to increase in 2024 due to improved performance of Oilbank, Marine Solutions, and shipbuilding affiliates. Researchers Yang Ji-hwan and Lee Ji-na noted, "However, whether the increased dividend income will be used to expand shareholder returns remains to be seen," adding, "It is more likely to be used for improving the financial structure, such as debt repayment." Operating profit in the second quarter of 2024 is expected to increase compared to the first quarter due to performance improvements in shipbuilding and other sectors excluding refining.