Operating Profit Soars 156% in Q2
Performance Improves as Hybrid Vehicle Sales Increase
Hyundai Motor-GM Alliance Expected to Boost Results
As sales of hybrid vehicles (HEVs) increase, Korea FT, an automotive parts manufacturer, continues to see improved performance. Demand for hybrid canisters, which are priced twice as high as those for internal combustion engine vehicles, has grown, leading to record quarterly operating profits in the second quarter of this year. With major clients Hyundai Motor and Kia planning to expand HEV sales at least until 2028, Korea FT's growth is expected to continue. The signing of a memorandum of understanding (MOU) for comprehensive cooperation between Hyundai Motor and the U.S. General Motors (GM) is also likely to have a positive impact on Korea FT's performance.
According to the financial investment industry on the 18th, Korea FT's stock price has risen 81% this year. Considering that the KOSDAQ index fell 15% during the same period, the market-relative return reaches 96 percentage points (P).
Korea FT's main product is the carbon canister. The carbon canister is an eco-friendly automotive fuel component that adsorbs evaporative gases generated inside the fuel tank with activated carbon and allows them to combust when the engine operates. It plays a role in preventing air pollution. HEVs and plug-in hybrid vehicles (PHEVs) have longer fuel residence times in the fuel tank when using the motor. This is why high-spec canisters are required. Since these products are 2 to 3 times more expensive than those for conventional internal combustion engines, Korea FT's sales and profit scale increase as the proportion of HEV canister sales rises.
In the second quarter, Korea FT recorded sales of 190.6 billion KRW and operating profit of 12.8 billion KRW. Compared to the same period last year, sales increased by 14.0% and operating profit surged by 156.3%. Changho Kim, a researcher at Korea Investment & Securities, explained, "The factor behind profitability expansion is the increase in HEV sales by Hyundai Motor Group," adding, "Considering the launch of the Carnival HEV in the U.S. in the second half of this year, Hyundai Motor Group's HEV sales are expected to grow." He further stated, "As the exclusive supplier of canisters to Hyundai Motor Group, the increase in HEV sales leads to higher sales for Korea FT," and predicted, "If other automakers develop HEVs, Korea FT's chances of winning orders will increase due to its stable supply track record."
The cooperation between Hyundai Motor and GM is also expected to expand growth opportunities for Korea FT. Hyundai Motor and GM have agreed to mutually cooperate in key strategic areas going forward, seeking ways to reduce production costs, increase efficiency, and quickly provide a diverse range of products to customers.
Hyukjin Yoon, a researcher at SK Securities, analyzed, "GM has not benefited from the surge in hybrid sales because, unlike Ford, it does not have hybrid vehicles," adding, "If GM supplies hybrid vehicles through cooperation with Hyundai Motor, Korea FT and Sebang Battery are expected to benefit."
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