[Click eStock] "Hyundai Rotem's order timing remains uncertain... Target price cut 29%"

Korea Investment & Securities said on Oct. 13 that it would lower its 2027 earnings estimate for Hyundai Rotem and cut its target price from 270,000 won to 190,000 won to reflect uncertainty over the timing of new orders. It maintained its “Buy” rating.

According to Korea Investment & Securities, its 2027 operating profit estimate for Hyundai Rotem was set at 1.1201 trillion won, down 23.3% from its previous estimate. This would represent an 8.1% increase from the previous year. “Consolidated operating profit is expected to meet consensus estimates,” said Jang Namhyun, an analyst at Korea Investment & Securities. “The issue is new orders. Several large export projects are under way, including those in Iraq, Peru and Romania, as well as Poland’s third contract, but none has been signed yet.”

“If the absence of large export contracts persists, a downward revision to our 2027 earnings estimate will be unavoidable,” Jang said. “Given the supply-demand imbalance in the global tank market, the likelihood that these projects will result in signed contracts remains high, but we are adjusting for uncertainty over when they will be signed.” He added, “Once the timing and scale of future large export contracts become clearer, we may be able to raise our earnings estimates.”

The new target price of 190,000 won is 29.6% below the previous target. However, it implies more than 90% upside from the previous day’s closing price of 99,700 won. Korea Investment & Securities also maintained its “Buy” rating on Hyundai Rotem. “Once new contracts are reflected in the order backlog, visibility into medium- to long-term earnings growth will improve, which could also lead to a valuation re-rating,” Jang said. “We are lowering our near-term earnings expectations to reflect uncertainty over the timing of new orders, but there remains substantial potential for earnings and corporate value to rise through the signing of defense export contracts.”

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