"SL Expected to Benefit from Hyundai Motor Group's U.S. Production Expansion" [Click eStock]

Shin Young Securities Maintains "Buy" Recommendation

On September 2, Shin Young Securities maintained its "Buy" investment rating on SL Corporation, while lowering its target price from 85,000 won to 80,000 won.

Yongkwon Moon, a researcher at Shin Young Securities, stated, “SL Corporation stands to benefit structurally from Hyundai Motor and Kia’s production expansion in the United States and India.”

Researcher Moon noted that although sales growth in SL Corporation’s key overseas markets—North America and India—remained at only 5 percent and 3 percent respectively, he expects the company to return to a growth trajectory. He explained, “Hyundai Motor and Kia’s inventories in the United States fell to as low as 2.7 months in July, easing inventory pressures. With the planned ramp-up in production of the Telluride hybrid electric vehicle (HEV), the Sportage HEV, and the launch of the new Tucson in the second half of the year, North American sales, which declined by 0.2 percent in the second quarter, are expected to recover.” He added, “While a fire at the Hyundai Mobis India plant led to production disruptions for Hyundai Motor in India during the second quarter, production normalization in the third quarter should result in improved sales growth in India in the second half of the year.”

The analyst also highlighted that the operating margin of the lamp division has consistently remained above 8 percent for the past three years, thanks to the increased adoption rate of LED lamps and higher production in the United States and India. While raw material cost pressures present uncertainty in the electrification division, he expects overall profitability variation to stabilize, supported by quality cost stabilization and economies of scale for new products.

Researcher Moon concluded, “While a slowdown in earnings in the second half of the year due to higher labor and other cost burdens seems inevitable again this year, the structural benefits from Hyundai Motor and Kia’s production expansion in the United States and India remain valid, and new growth engines such as robot components continue to be promising factors for the mid- to long term.”

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