Brokerages cut HD Hyundai Electric, Hyundai Rotem targets on weaker won
In short
Hana Securities and Daishin Securities lowered their target prices for HD Hyundai Electric on 7 October, both keeping buy ratings, and DS Investment Securities cut its target price for Hyundai Rotem a day earlier. All three notes cite the fall in the won-dollar exchange rate as a drag on third-quarter earnings, with the Hyundai Rotem note also pointing to a delay in an expected Peru contract.
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Korean brokerages lowered target prices for two industrial companies in early October, citing the decline in the dollar-won exchange rate. Hana Securities cut its target price for HD Hyundai Electric to 1.15 million won from 1.44 million won while keeping a buy rating, Maeil Business reported on 7 October. Daishin Securities lowered its own HD Hyundai Electric target to 1.02 million won from 1.15 million won, also keeping a buy rating, according to Chosun Ilbo and Maeil Business. A day earlier, DS Investment Securities cut its target price for Hyundai Rotem to 226,000 won from 236,000 won and kept a buy rating, Yonhap reported. [ 1 , 2 , 3 , 4 ]
Hana Securities analyst Yoo Jae-sun estimated HD Hyundai Electric's third-quarter consolidated revenue at 1.1101 trillion won and operating profit at 286.3 billion won, up 11.5% and 15.9% from a year earlier but below market consensus. The operating margin was projected at 25.8%, a record high, Yoo said. He said the won-dollar decline slows revenue growth, while power equipment keeps improving margins on high-profit projects, with AI data-centre distribution equipment and energy storage projects earning more than existing products. [ 2 ]
Daishin Securities said HD Hyundai Electric's third-quarter results would fall short of market estimates because of the exchange rate, but argued that the share price already reflects the bad news and kept a buy rating. Chosun Ilbo put the previous trading day's close at 683,000 won. [ 3 , 4 ]
For Hyundai Rotem, DS Investment Securities analyst Kang Tae-ho said the target cut reflected the dollar-won decline and a shift in the expected signing of a Peru contract from the fourth quarter of this year to the first quarter of next year. Hyundai Rotem signed a general agreement with the Peruvian army last year for the supply of tanks and armoured vehicles and is negotiating a main contract, according to the note. Kang said the Peru export of K2 tanks and K808 armoured vehicles is a question of timing rather than whether it happens, and that Peruvian President Keiko Fujimori's visit to Korea is being arranged for December, where detailed talks are likely. [ 1 ]
The analyst said the general agreement covers 54 K2 tanks and 141 K808 vehicles, and that additional contracts — 150 more K2 tanks by 2040 and 280 more K808 vehicles by 2034 — along with maintenance, repair and overhaul cooperation are under discussion. Hyundai Rotem's third-quarter revenue and operating profit were projected at 1.73 trillion won and 266.6 billion won, up 7.1% and 4.0% year on year and slightly below consensus; Kang attributed the shortfall to the exchange rate and the start of production of lower-margin domestic volume. He added that a provision reversal and a possible margin revision on the second executive contract for Polish K2 tanks could partly offset the currency effect. Hyundai Rotem shares stood at 116,500 won at the previous close. [ 1 ]
Why it matters
The notes show how a weaker dollar against the won is feeding into Korean exporters' earnings forecasts, even for companies still expected to post year-on-year growth. For Hyundai Rotem, the timing of a Peruvian tank and armoured vehicle order is the swing factor, with a December visit by Peru's president flagged as the next chance to advance it. Both brokers kept buy ratings, presenting the problem as timing rather than demand.
Key facts
- Hana Securities lowered its target price for HD Hyundai Electric to 1.15 million won from 1.44 million won while keeping a buy rating. [ 2 ]
- Daishin Securities lowered its HD Hyundai Electric target price to 1.02 million won from 1.15 million won and kept a buy rating, saying the share price already reflects the negative news. [ 3 , 4 ]
- Both Hana Securities and Daishin Securities attributed HD Hyundai Electric's weaker third-quarter outlook to the fall in the won-dollar exchange rate. [ 2 , 3 , 4 ]
- DS Investment Securities cut its Hyundai Rotem target price to 226,000 won from 236,000 won on 6 October, keeping a buy rating. [ 1 ]
- Hana estimated HD Hyundai Electric's third-quarter consolidated revenue at 1.1101 trillion won and operating profit at 286.3 billion won, up 11.5% and 15.9% year on year but below market consensus. [ 2 ]
- Hyundai Rotem's third-quarter revenue and operating profit were projected at 1.73 trillion won and 266.6 billion won, up 7.1% and 4.0% year on year and slightly below consensus. [ 1 ]
- Hyundai Rotem shares stood at 116,500 won at the previous close, and HD Hyundai Electric closed at 683,000 won the previous trading day. [ 1 , 3 ]
Confirmed by several sources
- Hana Securities and Daishin Securities both lowered their target prices for HD Hyundai Electric and both kept buy ratings. [ 2 , 3 , 4 ]
- Both brokerages cited the fall in the won-dollar exchange rate as a factor behind a weaker-than-expected third quarter for HD Hyundai Electric. [ 2 , 3 , 4 ]
- DS Investment Securities lowered its target price for Hyundai Rotem, citing the dollar-won rate decline and a shift in the expected timing of a Peru contract. [ 1 ]
Still unclear
- Whether Hana Securities' cut of its HD Hyundai Electric target price from 1.44 million won to 1.15 million won is corroborated by other outlets. Reported only by Maeil Business; the other two documents describe Daishin Securities' cut instead.
- Daishin Securities' full reasoning on AI data centres and HD Hyundai Electric. The Chosun Ilbo document is a truncated feed summary and the quoted comment is cut off mid-sentence.
- Whether the Peru K2 tank and K808 armoured vehicle contract will be signed in the first quarter of 2027, and whether additional volumes and maintenance cooperation will be included. Stated as an expectation by the DS Investment Securities analyst in a single document, with no confirmation from the company or from Peruvian officials.
What local media are saying
Timeline, local time
- Yonhap publishes the DS Investment Securities note cutting its Hyundai Rotem target price to 226,000 won from 236,000 won. [ 1 ]
- Maeil Business reports Hana Securities' cut of its HD Hyundai Electric target price to 1.15 million won from 1.44 million won. [ 2 ]
- Chosun Ilbo reports Daishin Securities' cut of its HD Hyundai Electric target price to 1.02 million won from 1.15 million won. [ 3 ]
- Maeil Business reports the same Daishin Securities note on HD Hyundai Electric. [ 4 ]
- Peruvian President Keiko Fujimori's visit to Korea is being arranged for December, according to the DS Investment Securities note; no time of day is given. [ 1 ]