DS Investment Securities noted on the 14th that the stock price of HD Hyundai Construction Equipment rose sharply due to expectations that the Russia-Ukraine war will end after three years, but it evaluated that the anticipation is at an excessive level. DS Investment Securities maintained a 'sell' rating on HD Hyundai Construction Equipment. The appropriate stock price remained at 74,000 won, which is 10.6% lower than the previous day's closing price.
Yang Hyeong-mo, a Research Institute at DS Investment Securities, said that there is a high possibility that Russia will take over the territories it has occupied in Ukraine during the peace negotiation process, including Donetsk, Luhansk, Kherson, and Zaporizhzhia. In this case, the estimated scale of Ukraine's reconstruction project will drastically decrease, as the reconstruction of the occupied territories will be handled by Russia and China.
Yang stated, "The total amount to be invested in reconstruction in the future is expected to be between $400 billion and $500 billion, considering inflation," and noted, "In particular, the damage scale in Donetsk, Kharkiv, Luhansk, Zaporizhzhia, Kherson, and Kyiv exceeds $120 billion, accounting for 70% to 80% of the total damage amount."
Yang added, "The areas with the most damage are currently the Russian-occupied territories," and noted, "If Russia takes over the occupied territories, the scale of Ukraine's reconstruction will decrease to less than half of the existing estimate."
Yang also pointed out that considering Ukraine's gross domestic product (GDP) was only $150 billion before the war, it is questionable whether it will receive enough aid for the reconstruction effort.
In contrast, Yang evaluated that the stock prices of domestic construction equipment corporations have risen excessively. He remarked, "The reconstruction period for Ukraine is expected to take about 10 years, and the annual investment amount will only be around $40 billion to $50 billion," and added, "They will have to compete with various excavator manufacturers in aid countries like Europe and the United States, while currently, the stock price increase for domestic construction equipment companies is the highest in the world." He also said, "This reflects excessive expectations regarding the peace settlement."