April 26, 2024

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[THE INVESTOR] Hyundai Construction Equipment will grow on the back of an expanding global excavator market, said NH Investment and Securities on Nov. 17, maintaining a “buy” recommendation and 260,000 won (US$236.92) target price. 

Demand for replacements is rising as fast as large excavators are aging, and 20 ton-plus medium to heavy models sales are leaping 30 percent on-year, explained analyst Yoo Jae-hun.

Large excavators account for 30 percent of Hyunda’s revenue and as commodity price recovers, demands from emerging markets including Russia, Algeria, Australia, India and Indonesia, is steadily increasing, said the analyst. 

Earnings will improve in tandem with worldwide market growth, and the benefits from taking over manufacturing operations in China and India, as well as streamlining its sales networks will materialize next year, noted Yoo adding that market share in China in particular will rise to five percent from the current three percent.

Hyundai Construction Equipment’s stock price at 10 times its price-earnings ratio is gravely undervalued in comparison to those of its global peers that are trading at 19 times on average, according to the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)