“Revaluation of Robotics and Refining”... HD Hyundai Moves to Narrow Holding Company Discount

[Financial News] Analysts say HD Hyundai has entered a phase where its holding company discount is starting to narrow, supported by a recovery in refining earnings and expectations for a revaluation of its robotics subsidiary. The company’s consolidated operating profit in the fourth quarter of last year exceeded market expectations by more than 20%, and if the rising equity value of unlisted subsidiaries such as HD Hyundai Oilbank and HD Hyundai Robotics is fully reflected, its net asset value (NAV) per share is estimated at around 300,000 won.
According to the securities industry on the 13th, Samsung Securities maintained its “buy” rating on HD Hyundai and raised its target price by 24%, from 242,000 won to 300,000 won.
HD Hyundai’s consolidated revenue in the fourth quarter came to 18.737 trillion won, up 9.6% from a year earlier. Operating profit surged 124.6% year-on-year to 1.0972 trillion won, an increase of 15.8% from the previous quarter. This was 20.9% above the market consensus.
In the shipbuilding division, one-off costs such as additional performance bonuses were reflected, and profits in the construction equipment division also slowed due to factors including North American tariff costs. Even so, the refining division significantly improved its performance on the back of higher refining margins and favorable exchange rates, driving overall profit growth. The power equipment division also maintained solid profitability.
In particular, the improvement in earnings at HD Hyundai Oilbank, in which HD Hyundai holds a high equity stake, fed directly into net profit attributable to controlling shareholders. Fourth-quarter net profit attributable to controlling shareholders was 448 billion won, up 156.4% from the previous quarter and 120.9% from a year earlier.
As the share price of HD Hyundai, the holding company, has shown strong momentum since the start of the year, analysts say expectations are building for a revaluation of unlisted affiliates that had been regarded as “hidden assets.” Han Young-soo, an analyst at Samsung Securities, said, “We value the equity stakes in listed affiliates at 26.54 trillion won and those in unlisted companies at 12.155 trillion won,” adding, “If we add rental income and brand royalties, subtract net debt, and then apply a 56% holding company discount, the NAV per share comes out to 300,000 won.”
Han in particular valued HD Hyundai Robotics at a market capitalization level comparable to that of currently listed robotics companies. He cited the fact that HD Hyundai Robotics has the largest sales among domestic robotics firms, a relatively sound cost structure and financial position, and experience supplying to a wide range of industries. The refining business is also seeing rising expectations for a cyclical recovery, driven by heightened geopolitical tensions and improved refining margins. The corporate value of HD Hyundai Oilbank was likewise recalculated by applying competitors’ price-to-book ratios (PBR).
Earnings forecasts have also been revised upward. HD Hyundai’s earnings per share (EPS) attributable to controlling shareholders in 2025 are projected at 12,187 won, up 89.1% from the previous year, and are expected to rise a further 44.1% to 17,564 won in 2026. Its return on equity (ROE) is forecast to climb from 6.4% in 2024 to 13.5% in 2026.
The company’s financial structure is also improving rapidly. Net debt is expected to fall from 11.881 trillion won in 2023 to 3.181 trillion won in 2025, and to shift to a net cash position in 2026. Its interest coverage ratio is likewise projected to improve from 3.1 times in 2024 to 8.6 times in 2026.
dschoi@fnnews.com Reporter Choi Doo-seon Reporter