Earnings Hobbled by Exchange Rates... HD HYUNDAI ENERGY SOLUTIONS CO., LTD. Plunges 8% [Stock NOW]

[Financial News] HD HYUNDAI ENERGY SOLUTIONS CO., LTD. plunged early in the session as results fell well short of market expectations. The weaker exchange rate and higher raw material costs weighed on profitability, prompting further cuts to target prices by securities firms.
At 9:49 a.m. on the 27th, HD HYUNDAI ENERGY SOLUTIONS CO., LTD. was trading at 88,300 won on the Korea Exchange, down 8,000 won (8.31%) from the previous trading day. The shares opened at 90,000 won and fell as low as 84,800 won during the session.
HD HYUNDAI ENERGY SOLUTIONS CO., LTD. reported revenue of 150.8 billion won and operating profit of 20.4 billion won for the third quarter of this year. Operating profit rose 39.0% from the same period a year earlier but came in about 41% below the market estimate of 34.9 billion won.
The main reason for the weak results was the exchange rate. As the won-dollar exchange rate fell, the won-converted value of dollar-denominated revenue declined. Meanwhile, raw materials purchased in the second quarter when the exchange rate was higher were used in production, increasing cost pressures. Profitability fell short of expectations despite higher sales volumes in South Korea and the United States.
Target prices were also lowered following revisions to earnings estimates. Kyobo Securities cut its target price to 184,000 won, while DS Investment & Securities lowered its target to 170,000 won. Both firms maintained their ‘Buy’ ratings.
DS Investment & Securities analyst Joo Won Ahn said, "It had been forecast that operating profit of around 30 billion won could be achieved even excluding one-off gains in the second quarter, but results were weaker due to the exchange-rate impact. For a meaningful rise in the share price to continue, whether domestic production facilities are expanded and next year's business plan reflecting that will be important." 

[email protected] Bae Han-geul Reporter