[Click e-Stock] "Hyundai Rotem Expected to Achieve Record-High Results Again in Q2... Target Price Raised"

Target Price Raised from 135,000 Won to 170,000 Won

On May 27, Hanwha Investment & Securities announced that it expects Hyundai Rotem to achieve record-high results in the second quarter of this year, following its performance in the first quarter. The firm raised its target price from 1,350,000 won to 1,700,000 won, while maintaining its 'Buy' investment rating.

Bae Sungjo, a researcher at Hanwha Investment & Securities, stated, "Second-quarter results are expected to show sales of 340.3 billion won, up 22.5% year-on-year, and operating profit of 237.5 billion won, up 110.7%, marking another record-high quarterly operating profit following the first quarter." He added, "With the early delivery of 14 K2 tanks related to Poland's first contract at the end of last year, 82 units are scheduled for delivery this year, completing a total of 180 units delivered." He continued, "Despite this, the production pace does not appear to be slowing down, as continuous production will be maintained through the second contract, and we do not expect any export gaps."

In the first quarter, Hyundai Rotem posted sales of 1.1761 trillion won, up 57.3% year-on-year, and operating profit of 202.9 billion won, up 354%. Researcher Bae analyzed, "First-quarter defense sales increased by 106.9% to 657.9 billion won, with exports accounting for 71.4% and an operating margin of 29.5%, surpassing the operating profit consensus (the average of securities firms' forecasts) by about 9%."

Growth is expected to continue next year as well. Bae forecast, "Hyundai Rotem's annual results for next year are expected to show sales of 6.0751 trillion won, up 13.1% year-on-year, and operating profit of 1.0771 trillion won, up 9.5%." He added, "Production for Poland is expected to remain at over 80 to 90 units per year, and with recognition of the fourth domestic K2 mass production, the defense division's sales should grow by more than 15%." He also stated, "In addition to Romania, additional exports to various regions such as Slovakia, Peru, and the Middle East will serve as upside factors."