“HD Construction Equipment Co., Ltd. and Doosan Bobcat: Data Center-Driven Revenue Growth,” Kiwoom Securities

[Financial News] As earnings at the country’s leading construction equipment companies remain flat, attention is turning to factors that could drive a rebound. Analysts say growth in the engine business is key for HD Construction Equipment Co., Ltd., while Doosan Bobcat’s prospects depend on a recovery in the U.S. housing market. Artificial intelligence (AI) data centers are seen as a common factor.
According to Kiwoom Securities on the 15th, HD Construction Equipment Co., Ltd.’s third-quarter revenue and operating profit are forecast at 2.2611 trillion won and 171.5 billion won, respectively, both below market expectations.
The forecasts are lower than expected because sales in the construction equipment business remain sluggish, partly due to disruptions caused by equipment utilization problems in Africa.
The engine business, however, is expected to post strong results, with third-quarter exports of gas and diesel engines forecast to grow 129% and 32%, respectively. This is due to expanding exports of high-margin power-generation engines, including deliveries for AI data centers.
Analyst Lee Han-gyeol said, “As demand for data center power increases sharply, particularly in North America, we expect deliveries of power-generation engines to continue expanding over the long term.” He added, “The Incheon engine plant plans to invest in a new production line, and production of ultra-large power-generation engines at the Gunsan plant will begin early next year. After operations ramp up in 2028, revenue from power-generation engines will grow to nearly double this year’s level.”
Doosan Bobcat’s third-quarter revenue is forecast at 2.3103 trillion won and operating profit at 178.4 billion won, in line with market expectations. North America and Europe are its key markets for compact construction equipment, making the company highly sensitive to the housing market, where weakness has persisted. In particular, construction spending on housing in North America in July and August fell 5.3% from the same period a year earlier.
Even so, earnings are expected to be no lower than market expectations thanks to construction spending in the nonresidential sector. U.S. data centers are a prime example. As investment in infrastructure continues amid the expansion of data centers, demand for construction equipment is also growing. Infrastructure investment in Europe, including in power grids and railways, is continuing as well. However, data centers and infrastructure projects have greater need for large equipment, limiting the extent to which this can drive growth for Doosan Bobcat, whose business focuses on compact equipment.
The analyst expects that “although Doosan Bobcat’s growth will be somewhat limited because data centers and infrastructure projects are centered on medium- and large-sized equipment, profitability will improve slightly as price increases are reflected and the ramp-up at its Mexico plant is completed.”
[email protected] Kim Yun-ho Reporter