[Alpha Biz= Reporter Paul Lee] SK Securities raised the target price of Hyosung Heavy Industries to 380,000 won. Both sales and operating profit in the first quarter of this year are expected to meet market forecasts.
"We expect both sales and operating profit to be in line with consensus (market forecast average)," SK Securities said. "We expect first-quarter sales to increase by 19% year-on-year to 1.7 trillion won and operating profit by 365% to 66 billion won."
Heavy industry sales are expected to increase 30% from the previous year to 619 billion won and operating profit to 46 billion won. Analysts say that sales of high-pressure power devices, which were delayed in the fourth quarter of last year, are expected to be recognized in the first quarter of this year, and profitability is also improving due to the U.S. corporate surplus. Sales in the construction sector are expected to reach 384 billion won, up 5 percent from the previous year and operating profit 28 percent to 19 billion won. Although there is a risk from real estate PF (project financing), the risk is limited compared to other construction companies because the project is focused on responsible completion.
This year's earnings estimate was lowered, but the strategic equipment industry was positively forecasted. The adjusted earnings estimates are KRW 4.773 trillion in sales and KRW 378 billion in operating profit, up 11% and 47% from the previous year, respectively.
As for the rise in target stock prices, SK Securities said, "The company is undervalued compared to HD Hyundai Electric because it runs its construction business division," adding, "We believe it has come at an attractive price compared to its competitors."
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
