Korea Investment & Securities noted on the 28th that Hyundai Mobis reported results exceeding expectations as its core institutional sector transitioned to a profit, which had previously acted as a discount factor for its stock price. Accordingly, it maintained its investment opinion as "buy" and raised its target price from 330,000 won to 380,000 won, an increase of approximately 15%.
Hyundai Mobis recorded consolidated revenues of 15.9362 trillion won and operating profit of 870 billion won for the second quarter of this year. This represents increases of 8.7% and 36.8%, respectively, compared to the same period last year. Although the strong conversion of the won to dollar exchange rate slightly decreased the profitability of the after-sales service, the core institutional sector's transition to a profit of 42 billion won was a major factor that exceeded market expectations.
Kim Chang-ho, a researcher at Korea Investment & Securities, said, "The improvement in core institutional sector profitability, despite the impact of tariffs, is largely attributed to the AMPC subsidies of 45 billion won and the increased operating rates of the electrification factory in the U.S.," adding that, "While the results exceeding expectations are positive, qualitative improvements are needed."
He further stated, "The performance of the core institutional sector shows a pattern of lower earnings, as research and development (R&D) expenses are reflected in the first half of the year, and this will be recouped in the second half," noting that, "Despite this structure, it has already transitioned to a profit in the second quarter."
The researcher predicted, "Concerns about reduced AMPC exist as the tax credits for EVs provided in the U.S. will end on Sept. 30, but the launch of new plants by Hyundai Motor Group will allow for continued subsidies at the second-quarter level, partially offsetting the expanded tariff costs," adding that, "Additionally, the increase in sales for the parts manufacturing division, focused on electronic components, will continue not only in the second half but at least until 2027."
He evaluated that "Hyundai Mobis has historically received multiples 1 to 2 times higher than complete vehicles," noting, "With the transition of the core institutional sector to profitability, the direction for profit improvement is clear, and despite the recent rise in stock prices, we believe the valuation still presents significant attractiveness."