KB Securities noted on the 26th that Hyundai Rotem will continue to post strong performance in the second quarter. It maintained its investment opinion of "buy" and raised the target price from 120,000 won to 165,000 won. The closing price of Hyundai Rotem was 125,400 won on the previous trading day.
Hyundai Rotem announced that it recorded sales of 1.1761 trillion won and an operating profit of 202.9 billion won in the first quarter of this year (January-March). This represents an increase of 57.3% and 354% compared to the same period last year, marking the first time in its history that quarterly operating profit exceeded 200 billion won.
Researcher Jeong Dong-ik at KB Securities estimated that the operating profit margin for defense exports in the first quarter would be 38.3%, analyzing that it is a result of high contract margins due to the high prices of competitive products, alongside improvements in productivity due to currency rate increases and a rise in production volume, as well as cost reductions from bulk purchases.
He further noted, "Even considering a decline in the exchange rate, the operating profit margin for the current defense export backlog will be maintained at over 30%." He projected, "There will be no occasion where quarterly operating profit falls below 200 billion won in the future," and presented Hyundai Rotem as the top preferred stock in the defense industry.
KB Securities projected that Hyundai Rotem's production of K2 tanks would surge from 102 units last year to 161 units next year, and reach 215 units by 2028.
Researcher Jeong stated, "Delays in contracts with countries such as Poland and Romania have raised investor concerns, but Hyundai Rotem continues to proceed with material orders, production, and facility expansions regardless of the timing of the contract awards. Ultimately, it seems to be a matter of timing, and there should be no issues with securing orders."