[Click eStock] "Hyundai Rotem, Operating Profit Expected to Surpass 1 Trillion Won This Year... Target Price Up"

Target Price Raised from 80,000 Won to 100,000 Won

Hana Securities raised the target price for Hyundai Rotem from 80,000 won to 100,000 won on the 7th, expecting the company's operating profit to surpass 1 trillion won this year following strong performance in the defense sector in the fourth quarter of last year. The investment rating was maintained as 'Buy.'

Hyundai Rotem recorded sales of 1.4408 trillion won in the fourth quarter of last year, a 45.7% increase compared to the same period the previous year, and operating profit rose 131.7% to 161.7 billion won. The operating profit slightly missed market expectations (164.8 billion won), which is analyzed to be due to a one-time cost of approximately 140 billion won in the Rail Solution division (provision for previously ordered volumes).

Wigyeongjae, a researcher at Hana Securities, stated, "Assuming the one-time cost did not exist, the company's operating profit from business activities would exceed 300 billion won," adding, "Considering the minimal profit contribution from the Rail Solution and Eco Plant divisions, it is estimated that the defense sector's operating profit was around 300 billion won. This is an incredible performance."

The researcher focused on Hyundai Rotem's defense export volume, led by the Polish K2 tank. He estimated, "The shipment volume of K2 tanks in the fourth quarter of last year is presumed to be in the mid-30s, significantly higher than the previously expected 22 units," and estimated the export volume operating profit margin to be around 45%. He explained, "The won-dollar exchange rate rose to about 1,470 won in December last year, so the exchange rate effect is likely reflected," adding, "Despite this, the profit margin is unbelievably high."

For Hyundai Rotem's annual performance in 2025, sales of 6.3283 trillion won and operating profit of 1.0197 trillion won were presented. Although a base for high export profitability in the domestic defense sector has been established over the past 2 to 3 quarters, even with a conservative approach, the researcher diagnosed that Hyundai Rotem's operating profit will surpass 1 trillion won in 2025.