[Click eStock] "Hyundai Rotem Meets Earnings, Large Orders Also in Sight"

Second Contract with Poland Expected Soon
Additional Orders from Romania Anticipated... Strong Performance Forecast for This Year

Hyundai Rotem is expected to achieve a solid operating profit of over 170 billion KRW in the first quarter of this year. Large-scale orders from Poland and Romania are also anticipated, indicating continued growth in the future.

On the 11th, KB Securities maintained its 'Buy' rating and target price of 120,000 KRW for Hyundai Rotem based on these factors. The closing price on the previous day was 99,000 KRW.

The expected performance for the first quarter of this year is consolidated sales of 1.236 trillion KRW and an operating profit of 173.9 billion KRW. Compared to the same period last year, sales increased by 65.3% and operating profit by 289%. Although the consensus (market forecast) is slightly below these figures, the impact on the stock price is expected to be limited. Since the operating profit consensus range varies widely from 103 billion to 237.3 billion KRW, attention should be paid to the growth compared to the same period last year.

Among the first batch of 180 K2 tanks ordered by Poland, the number of units delivered last year increased from 56 to 70, resulting in a 'surprise performance' in the fourth quarter of last year. Although the number of deliveries this year has decreased, Hyundai Rotem is not slowing down production speed. This is interpreted as anticipation of confirming the order for the second batch (2-1) of Poland.

If the delayed execution contract for the 180 units of the second batch (2-1) of K2 tanks for Poland is signed soon, it is expected to significantly exceed the first contract amount of 4.5 trillion KRW. Separately, contracts for recovery, bridge-laying, and obstacle-clearing tanks are also expected to be finalized. This is why there is analysis suggesting the total contract size could reach 7 to 9 trillion KRW.

Jung Dong-ik, a researcher at KB Securities, explained, "By the end of the first half, the first contract for Romania, expected to be around 100 units, is also anticipated, so the order momentum will continue," adding, "Since the stock price adjustment since mid-last month, there is also room for additional price increases."

On October 2nd last year, a model of Hyundai Rotem's next-generation tank was exhibited at the 'Korea International Defense Industry Exhibition' held at Gyeryongdae, Chungnam. Photo by Jinhyung Kang aymsdream@