[Click eStock] "Myeongsin Industry Faces Financial Health Concerns, Hopes Rely on New Car Momentum"

No Additional Financial Support for Affiliates
Expecting New Car Volume Effects from North American Clients

Myeongshin Industry is facing growing concerns over financial support due to the poor performance of its group affiliates and the deterioration of financial soundness. However, it is understood that there are no plans for additional financial support to its subsidiaries. There is an expectation to see the effect of new car volumes from customers in 2Q.

On the 19th, Daishin Securities maintained its 'Buy' rating and a target price of 17,000 KRW for Myeongshin Industry based on this background. The closing price the previous day was 9,580 KRW. Myeongshin Industry’s financial soundness concerns surfaced as it provided funds to its affiliate Myeongshin, which belongs to the same MS Group, due to the affiliate’s poor performance. As a result, the stock price fell 11% in one day.

The affiliate Myeongshin acquired the GM Gunsan plant in 2019 for 113 billion KRW but continues to face performance burdens due to the withdrawal of plans for electric vehicle contract manufacturing. Although efforts are underway to normalize profitability through partial sale of the plant site, smart factory, and logistics center projects, no results have yet been seen. As of Q3 last year, Myeongshin Industry’s loan balance to MS Autotech was 18 billion KRW, and the guarantee amount provided was 3.9 billion KRW.

Kim Gwiyeon, a researcher at Daishin Securities, explained, "It is understood that Myeongshin Industry has no plans for additional financial support to its affiliates," adding, "While concerns reflecting Myeongshin’s poor performance are inevitable, attention should be paid to the full-scale effect of facelift volumes of North American electric vehicle customers’ sport utility vehicles (SUVs) and changes in shareholder return policy trends."