NH Investment & Securities announced on October 6 that while Hyundai Mobis continues to recover its core profitability, it lacks momentum in new business areas such as robotics. As a result, the firm has lowered its target price for Hyundai Mobis from 710,000 won to 570,000 won, while maintaining a 'buy' rating.
Analyst Ha from NH Investment & Securities stated, "The increasing cost burdens on global automakers, along with the suspension and delays of electrification projects, are slowing the transition to software-defined vehicles (SDVs). Coupled with a decline in automotive demand, we have adjusted our earnings estimates."
For the third quarter, Hyundai Mobis is expected to report sales of 15.744 trillion won, a 4.7% increase from the same period last year, and an operating profit of 891 billion won, up 14.2%, slightly below market expectations. The production decline due to the Hyundai Motor labor union strike and reduced business days during domestic holiday periods are anticipated to limit revenue growth.
However, the firm expects a potential annual profit turnaround due to solid growth in the after-service (AS) division and a recovery in the profitability of the parts manufacturing sector. Following the recent sale of its lamp division, Hyundai Mobis plans to gradually divest other low-profit businesses, including bumpers.
Ha added, "If the robotics division secures external customers and clarifies its capital expenditure (CAPEX) plans, we expect a re-rating of the overall group valuation."
* This article has been translated by AI.
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