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[Click eStock] "Hyundai Rotem, Profit Expected to Increase 40% Next Year... Target Price Up"

Target Price Raised by 28% Compared to Previous Estimate

NH Investment & Securities forecasted on the 4th that Hyundai Rotem's operating profit next year will increase by 40% compared to this year and raised the target stock price from 60,000 KRW to 77,000 KRW. The investment rating was maintained at 'Buy.'


Lee Jae-kwang, a researcher at NH Investment & Securities, stated, "The second contract for the Poland K2 is imminent, so the basis for calculating the target stock price was changed to next year's performance, and the target price was raised by 28% compared to the previous one due to the upward revision of earnings estimates reflecting the high profitability of the first Poland K2 contract confirmed in the second quarter." He added, "The target stock price is based on a price-to-earnings ratio (PER) of about 20 times next year's earnings, which is not considered excessive compared to global peers."


The second contract for the Poland K2 tank is expected to be imminent. The researcher said, "It is believed that the contract signing has been delayed due to continuous new technical requirements reflecting changes on the Ukrainian battlefield," and added, "Considering that the delivery of the first contract will be completed next year, the possibility of signing the second contract within this year is high."


Hyundai Rotem's third-quarter performance this year is expected to be similar to that of the second quarter. The researcher analyzed, "It appears that 18 units of the Poland K2 were delivered in the first half, and it is estimated that 38 units will be delivered in the second half," adding, "Although the decline in the exchange rate will act as a factor reducing profitability, the effect of increased volume may offset this." He further added, "Next year's operating profit is estimated to increase by 40% compared to this year because the number of Poland K2 deliveries will increase from 56 units this year to 96 units."

[Click eStock] "Hyundai Rotem, Profit Expected to Increase 40% Next Year... Target Price Up"


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