"US Plant Drives Hybrid Engine Growth... Hyundai WIA Set for Earnings Recovery in Second Half" [Click e-Stock]

On August 5, Daol Investment & Securities stated that Hyundai WIA is expected to benefit structurally from increased sales of hybrid electric vehicles (HEVs) by finished car makers in the second half of the year, as well as from production expansion at Hyundai Motor Group's new plant in the United States. The target price remains 93,000 won with a "Buy" recommendation.

Researcher Yu Jiwoong at Daol Investment & Securities reported that, on a consolidated basis, Hyundai WIA’s sales in the second quarter this year recorded 2.3538 trillion won, an increase of 8.0% from the same period last year, while operating profit fell by 10.5% to 50.4 billion won. He explained, "Although the module business saw considerable sales growth, some finished vehicle models experienced engine supply issues, leading to losses in engine and constant velocity (CV) parts sales in the domestic market."

A full-fledged recovery in earnings is anticipated to begin in the second half of the year. Yu said, "Starting from the third quarter, mass production of Sportage HEVs will begin, which will be a key driver of volume growth. HMGMA’s mass production plan foresees around 30,000 Sportage HEVs in the second half of the year and expansion to 70,000 units by 2027. Additionally, the production of Tucson HEVs is also scheduled to begin in the third quarter, with annual production of gamma engines for HEVs expected to exceed 100,000 units by 2027."

There is also mention that the possible sell-off of the defense business could resurface towards the end of the year. Yu analyzed, "If the defense industry division is sold, around 300 billion to 400 billion won in cash could be raised," adding that this could accelerate investments in robotics and mobility.

This content was produced with the assistance of AI translation services.