[Click eStock] "HD Hyundai Electric, Stable Profit Improvement... Target Price Raised"

Target Price Raised by 26.4% from Previous Level

On January 16, Korea Investment & Securities raised its target price for HD Hyundai Electric from 8.7 million won to 11 million won, citing expectations that the company will continue to achieve stable profit improvements. The investment opinion of 'Buy' was maintained.

Jang Namhyun, a researcher at Korea Investment & Securities, stated, "Profit margin growth is expected to continue due to improvements in the sales mix," adding, "With increasing sales in the United States, we forecast operating margins of 26.4% in 2026 and 29.1% in 2027. Accordingly, we expect the average annual growth rate of earnings per share (EPS) from 2025 to 2027 to reach 39.2%, maintaining a stable profit improvement trend."

For the fourth quarter of last year, HD Hyundai Electric is projected to post consolidated sales of 147.8 billion won, up 40.7% year-on-year, and operating profit of 267.7 billion won, up 60.9%. This is expected to be in line with the consensus operating profit estimate of 278.4 billion won. Jang commented, "Continued growth in exports of ultra-high voltage transformers to the United States is expected to drive a 14.5% increase in sales in the power equipment division, reaching 665.2 billion won. In addition, we estimate that the proportion of U.S. sales will exceed 35%, and more than 80% of reciprocal tariffs can be passed on to customers. As a result, the operating margin in the fourth quarter is expected to improve by 2.9 percentage points to reach 23.3%."

The profit improvement cycle is expected to continue over the medium to long term. Jang explained, "HD Hyundai Electric is currently undergoing two phases of capacity expansion, and considering both phases, we expect sales to increase by more than 500 billion won. The full effect of the expansion is expected to be realized in 2028." New orders are also steadily increasing. In the third quarter of 2025, new orders from North America rose 192.3% year-on-year, while new orders from Europe grew by 168.9%. Jang noted, "The sales recognition for these orders is expected to occur in 2028. Since new orders are increasing in line with the full reflection of the expansion effect in 2028, profitability improvement is expected to continue even beyond 2028."