[Click eStock] "Hyundai Rotem, 2024 Performance Improvement Expected ... Analysis Initiated"

On the 28th, BNK Investment & Securities announced that it is initiating coverage on Hyundai Rotem, expecting the Defense Solutions division to drive increases in sales and operating profit in 2024. The target price is set at 59,000 KRW.

Researcher Lee Sang-hyun stated, "Although the recent Q1 consolidated results were favorable compared to the same period last year, they fell 17% short of consensus (based on operating profit). In particular, the Defense Solutions division underperformed market expectations due to the production of re-delivery volumes not reflected in sales, concentrated in Q1, related to the Polish Gap Filler units for the K2 tank."

He added, "The impact of the Gap Filler is expected to be resolved starting from Q2. We forecast sales and operating profit growth of 10% and 35%, respectively, in 2024, with Defense Solutions expected to lead this growth."

He also explained, "We have secured more than five years’ worth of orders and anticipate additional contracts for the second phase of Poland and for Romania. New orders in Q1 2024 amounted to 1.6 trillion KRW, and the order backlog stands at 18.6 trillion KRW, securing 5.2 years’ worth of volume based on last year’s sales."

He continued, "Major expected future orders include the second phase contract for the Polish K2 tanks, the fourth mass production contract for domestic K2 tanks, and orders for K2 tanks destined for Romania."