[Click eStock] "'Quarterly Record Performance' Hyosung Heavy Industries, Target Price Raised"

Hana Securities on the 4th raised the target price for Hyosung Heavy Industries to 600,000 KRW, up 15.4% from the previous target, stating that "despite temporary cost reflections, the company recorded its highest performance in the fourth quarter of last year." The buy rating was also maintained.

On the same day, Jaeseon Yoo, a researcher at Hana Securities, stated, "We applied a price-earnings ratio (PER) of 14 times to the expected earnings per share (EPS) for next year."

Hyosung Heavy Industries' fourth-quarter performance last year met the market's average expectations. During this period, sales reached 1.5715 trillion KRW, an increase of 21.6% compared to the previous year. Researcher Yoo said, "Considering the reflection of labor-related costs, there is actually a faster-than-expected margin improvement," adding, "It is positive that double-digit profit margins are continuing at overseas production subsidiaries."

He also said, "New heavy industry orders amounted to 1.1 trillion KRW, with selective orders being made, and the order backlog is on an upward trend at 9.2 trillion KRW compared to the previous quarter," analyzing, "As the proportion of overseas orders in North America and Europe steadily increases, margins are expected to continue improving in the long term. Based on this year's estimates, the PER is 12.2 times and the price-to-book ratio (PBR) is 2.6 times."

During the same period, operating profit reached 132.2 billion KRW, an increase of 108.5% year-on-year, achieving the highest quarterly profit. Heavy industry profits were 115.2 billion KRW, up 150.4% year-on-year, and the margin improved by 5.0 percentage points to 10.8%. Excluding one-time labor-related costs, it is estimated that the profit margin was in the low 13% range, similar to the previous quarter. The construction segment maintained a single-digit mid-to-high level operating profit margin of 3.3%. Despite reflecting expected business losses related to the debt assumption of three project financing (PF) sites and fines from the Fair Trade Commission in non-operating expenses, pre-tax profit improved significantly compared to the previous year.

Researcher Yoo noted, "Despite resolving all latent risks in the construction sector this quarter, achieving a quarterly net profit surplus is due to solid performance," and pointed out, "With the debt ratio lowered to the low 200% range through asset revaluation, concerns about financial stability and funding are limited."

He also added, "Recently, orders from Europe have been increasing. Significant demand has been confirmed, such as transformer supply contracts related to offshore wind power projects in the UK," and said, "With existing strong demand in North America already insufficient to meet, opportunities for additional order expansion continue, making it a time to consider additional investment in production capacity expansion beyond the existing planned expansions."