April 27, 2024

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[THE INVESTOR] Hyundai Rotem has posted an operating loss in the fourth quarter last year due to the struggling plant sector, said IBK Securities on Feb. 2, lowering the target price to 22,000 won (US$20.43) from 23,000 won.

Its revenue in the period fell 12 percent on-year to 752.6 billion won and operating loss came in at 23.5 billion won, significantly below market consensus, said analyst Lee Sang-hyeon.

Revenue was dented by declining exchange rate which led to an increase in fixed costs, and 53 billion won operating loss occurred in plant sector alone, as it had to bear an additional 60 billion won appropriation fund for a change in its Qatari project, said the analyst. 

Boosted by a major railway order from overseas, its yearly revenue will rise 8.2 percent to 2.95 trillion won and operating profit by 132.9 percent to 105.8 billion won, forecast Lee.

The target price has been lowered factoring in the unfavorable exchange rate and disappointing earnings from plant sector, but as order backlog increases this year, its earnings will improve, said the analyst maintaining a “buy” recommendation. 

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