Shinhan Financial Investment analyzed Hyundai Doosan Infracore on the 22nd that its third-quarter earnings will be far below the consensus due to a drop in machine sales in China.
In particular, the company lowered its investment opinion from "buy" to "hold," saying that there is high uncertainty in estimating its performance due to its limited upward momentum and a large drop in sales in the Chinese construction machinery market.
"Hyundai Doosan Infracore's performance in the third quarter of this year was tentatively estimated to rise 5.9% on-year to KRW 971.9 billion in sales, but we expect its operating profit to fall 48.1% to KRW 33.7 billion during the same period," Shinhan Investment said. "It is a sluggish performance with its consensus operating profit below 14.0%.".
The reason for the poor performance is a decrease in sales of construction machinery in China, a rise in logistics and raw material prices. Sales in China fell 61.5% year-on-year to 119 billion won.
This is due to the Chinese government's real estate regulations and the contraction of the real estate market due to the Hengda issue.
"Sales of market excavators in the third quarter were 39,000 units, down 32.2% from the same period last year," Shinhan Investment said. "Hyundai Doosan Infracore implemented a conservative sales policy to exhaust dealer inventory and sales fell 76.1% year-on-year due to intensifying competition among local companies.".
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
