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[Alpha Biz=(Chicago) Reporter Paul Lee] Kiwoom Securities diagnosed HD Hyundai Construction Machinery on the 16th that its stock price was undervalued compared to its global competitors. Fourth-quarter operating profit will fall below market expectations due to slowing profitability stemming from increased costs, but growth is expected to continue this year as demand for construction machinery in North America and emerging resource countries remains strong. It offered an investment opinion of "buy" and a target price of KRW 74,000.
"Fourth-quarter sales will reach 861 billion won and operating profit will reach 30.8 billion won, falling below market expectations," said Kiwoom Securities Co. "North America is still strong in advanced markets and Europe is slightly sluggish."
Kiwoom Securities analyzed that demand for mid- to large-sized construction machinery is occurring mainly as resource countries develop mines in emerging markets, but the slump continues in Asia, including China.
"Overall, sales will grow slightly as the global construction machinery market maintains solid demand," Kiwoom Securities said. "Profitability will slow down somewhat due to changes in product mix following the launch of new small excavators." It is also expected to reflect additional one-off costs such as development costs incurred in developing an integrated platform with HD Hyundai Infracore (042670).
Slowing growth is inevitable, but growth will continue. The construction machinery market in North America and emerging resource countries, which led last year's earnings growth, is expected to remain robust this year.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
