NH Investment & Securities(005940) said profit growth for Hyundai Glovis(086280) in the second half is expected as a shortage of global car carriers deepens. NH Investment & Securities kept a buy rating on Hyundai Glovis and a target price of 319,000 won.
Jung Yeon-seung of NH Investment & Securities said in a report on the 24th, "Hyundai Glovis' second-quarter results matched the lowered consensus (brokerage forecasts)," and noted, "operating profit decreased as a 60 billion won expense was reflected due to a time lag in applying fuel costs, but in the third quarter the expense can be settled."
Hyundai Glovis said second-quarter revenue rose 15.8% on-year to 8.7054 trillion won, but operating profit fell 8.2% to 494.5 billion won.
Second-quarter results were somewhat weak, but improvement is expected in the second half. Jung said, "Demand for car carriers is stronger than expected as China's finished-car exports increase, deepening the supply shortage," and added, "charter rates have recently strengthened further."
Jung said, "In the third quarter, with higher container and car-carrier freight rates and the impact of expense settlement, operating profit will reach a record-high 574.9 billion won."
According to NH Investment & Securities, Hyundai Glovis is set to add five large car carriers in the second half and nine next year. Jung added, "The operating fleet will expand from 98 vessels at the end of the second quarter to 129 next year, and by increasing non-affiliate, high-margin volumes through the added capacity, operating profit can be maximized."