"Expansion of Generator Engine Production Capacity" HD Hyundai Marine Solution Target Price Raised

[Financial News] Yuanta Securities predicted that the value of the aftermarket (AM) business resulting from the expansion of HD Hyundai Heavy Industries' power generation engine production capacity could lead to a revaluation of HD Hyundai Marine Solution's corporate value.
Yuanta Securities raised its target price for HD Hyundai Marine Solution from the previous 412,000 won to 448,000 won and maintained its investment opinion as 'Buy'.
On the 14th, Kim Yong-min, an analyst at Yuanta Securities, predicted, "HD Hyundai Heavy Industries plans to invest 833.6 billion won, including the site, to expand the group's production capacity for onshore power generation engines to a total of 4GW by 2030," adding, "While initial revenue and profits from the new business will be concentrated at HD Hyundai Heavy Industries, HD Hyundai Marine Solution's AM business will benefit more in the long term."
He particularly noted the structure in which AM sales and profits continuously increase as the operating volume (UIO) of newly supplied power generation engines accumulates.
The explanation is that, unlike the OEM business, the AM business accumulates a revenue base as the number of operating engines increases, enabling it to demonstrate differentiated profit growth in the long term.
Researcher Kim conservatively assessed the value of the AM business generated from new production capacity at 5.5 trillion won, and analyzed that even under a basic scenario with no engine or AM price increases and an AM operating profit margin of 40%, AM's sales and operating profit would surpass OEM in the mid-to-long term.
Accordingly, the target share price was raised by adding the value of the AM business for data center-oriented power generation engines to the existing business value, while the existing assessment that the company is the biggest beneficiary of the AIDC-oriented power generation engine business and the opinion that it is a top pick within the sector were maintained.
[email protected] Kang Jung-mo Reporter