[Click eStock] "HD Hyundai Electric: Expectations Remain High Despite Tariff Uncertainties"

Upward Momentum Despite Tariff and Data Center Uncertainties
Significant Production at U.S. Plant... Strong Demand for Renewable Energy

There are expectations that HD Hyundai Electric will maintain solid business conditions and performance despite uncertainties surrounding U.S. tariff policies. This is because a significant portion of production takes place at its U.S. plant, and domestic demand in the U.S. remains strong not only for data centers but also for renewable energy facilities.

On April 21, KB Securities maintained its 'Buy' investment rating for HD Hyundai Electric based on these factors. However, the target price was lowered by 7.8% to 4.7 million won. The previous trading day's closing price was 3,305,000 won.

The company explained that it slightly lowered its earnings estimates in the short term to reflect some tariff impacts and also factored in a rise in the cost of equity (COE). Nevertheless, it maintained the 'Buy' rating, citing continued upside potential.

For the first quarter of this year, the company is expected to post sales of 986.5 billion won and operating profit of 208.6 billion won, representing increases of 23.2% and 62.0%, respectively, compared to the same period last year. Net profit attributable to controlling shareholders is also projected to reach 162.7 billion won, up 73.1% year-on-year.

The main drivers of sales growth were power equipment related to ultra-high voltage transformers and the subsidiary segment. This reflects the recognition of U.S.-bound shipments (estimated at around 200 billion won) that were deferred from the fourth quarter of last year. The company also noted that the increase in exports to the U.S., which are relatively more profitable, led to a 5.0 percentage point rise in the operating margin.

Concerns over U.S. tariff policies and a potential slowdown in big tech's data center investments were also viewed as limited. Jeong Hyejeong, a researcher at KB Securities, stated, "A significant portion of U.S. sales is already supplied from the Alabama plant in the U.S., so general and reciprocal tariffs are only partially applied, and the anti-dumping tariff rate was 0%. The robust demand in the U.S. market is driven more by the expansion of renewable energy facilities and the replacement of aging infrastructure than by data centers, so the growth in orders and sales is expected to continue."