[Click eStock] "Hyundai Rotem: Growing Concerns Over Order Delays... Target Price Cut"

SK Securities Lowers Hyundai Rotem's Target Price to 180,000 Won

SK Securities said on October 20 that it was lowering its target price for Hyundai Rotem to 180,000 won from 310,000 won due to growing concerns over delays in overseas orders, while maintaining its “Buy” rating.

Hyundai Rotem posted consolidated third-quarter revenue of 1.6207 trillion won, up 0.1% year over year, and operating profit of 247.1 billion won, down 11.0%. Operating profit was about 10.5% below the market consensus of 276 billion won.

The AD&RH division, which oversees aerospace, defense, robotics and hydrogen, recorded revenue of 841.2 billion won and operating profit of 236 billion won. Although the export share declined, export businesses—including gap-filler (GF) deliveries for the second Polish K2 contract (EC2) and military supplies under the first contract (EC1)—generated stable margins and profits.

Han Seung-han, an analyst at SK Securities, said, “From 2028, we expect solid revenue and profit growth, driven by continued production of existing orders as well as new orders. We also look forward to synergies that will support growth by securing cost competitiveness through vertical integration of key defense components following the acquisition of Hyundai WIA’s special-purpose defense business, and by expanding technology focused on unmanned and remotely operated counter-drone systems.”

SK Securities cited a pullback in defense stocks and greater uncertainty surrounding the company’s order pipeline as reasons for lowering its target price. Peru is scheduled to begin parliamentary review and approval procedures next month, making a contract signing in early 2027 likely. In Romania, an order is expected in the first quarter of 2027, with the appointment of a new prime minister anticipated. In Iraq, concerns have grown over whether a contract can be signed amid political and fiscal uncertainty and the ongoing war in the Middle East.

Han said, “A revaluation based on medium- to long-term earnings growth will be possible once order momentum for the Iraqi and Romanian K2 projects, which remain uncertain, begins to strengthen. Until then, a cautious approach is necessary.”

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