[Click e-Stock] HD Hyundai Electric on Track, Profitability Leveling Up

Strong Q3 Results
Operating Margin Hits Record High for the Quarter

HD Hyundai Electric reported solid third-quarter results. Analysts predict that structural growth will continue, driven by high-margin ultra-high voltage transformers.

On October 24, Yuanta Securities raised its target price for HD Hyundai Electric by 9.6% to 9.1 million won, citing these factors. The previous day's closing price was 7,460,000 won.

In the third quarter of this year, revenue reached 995.4 billion won and operating profit was 247.1 billion won, representing year-on-year growth of 26.2% and 50.9%, respectively. Tariff costs for exports to the United States amounted to approximately 10 billion won, but although shipment volumes increased, the net burden was halved as some project refunds were reflected.

The operating margin reached a record high of 24.8% on a quarterly basis, up 4.0 percentage points from the same period last year. The company is now considered to have entered a phase of significant profitability improvement.

By business segment, the power equipment division led the results with sales of 587.8 billion won (+87.7%), mainly due to increased sales of ultra-high voltage transformers for North America. The distribution equipment division recorded 175 billion won (+0.1%), affected by base effects and deferred revenue from certain projects. The rotating machinery division posted 143.4 billion won (+9.2%); while demand from North America and the Middle East remained strong, a decline in profitability for low-voltage motors in Korea had some impact.

Structural growth momentum also remains strong. New orders in the third quarter totaled 1.212 billion dollars (+71.4%), bringing the cumulative total for the year to 3.5 billion dollars. At the current pace, the company is likely to exceed its annual target. Of the new orders, those for North America amounted to 763 million dollars (63% share), with a notable increase in orders for 765kV ultra-high voltage transmission projects. The proportion of North American orders in the total backlog also rose to 66%, indicating qualitative growth focused on profitability. Orders from Europe surged by 168.9% year-on-year to 164 million dollars, largely due to increased orders for transformers and GIS products in response to environmental regulations.

Son Hyunjung, a researcher at Yuanta Securities, said, "As the global supply shortage continues, the trend of price increases is being maintained. Despite tariff burdens, the ability to pass on costs has been confirmed, strengthening the supplier-dominant market environment. In addition, entry into new markets such as artificial intelligence (AI) data centers and local power generation infrastructure is diversifying demand sources across power grids, industrial, and renewable energy sectors."