Despite setbacks in finished vehicle manufacturing, Glovisâs earnings are now being buoyed by rising non-vehicle logistics, positive forex prices, and large cargo prices. The vitality transport company, that is set to be a fresh development motor, normally getting presence. We expect the firmâs valuations to recoup on the mid/long term.
Valuations to increase as presence of power delivery business increases
We preserve a Buy score and TP of W265,000 on Hyundai Glovis. Despite a decline in transport amount amid manufacturing disruptions at finished carmakers, changes to the profits forecasts remain restricted many thanks to: 1) positive forex prices; and 2) better product sales at non-automotive transport organizations. The company is experiencing valuation re-rating since it changes it self from a motor vehicle company into an extensive transport play (including power (LNG, hydrogen) delivery) by signing delivery agreements with international power leaders. Throughout the lasting, we be prepared to see positive alterations in shareholder return plan, including dividend expansion.
Recently, Glovis finalized a 10-year LNG shipping cope with the Australian power organization Woodside, with a choice to increase the agreement by five years. Underneath the agreement, Glovis begins its Australian LNG transportation company from 2H24. Throughout the mid/long term, the company hopes to grow its company range to incorporate overseas circulation of fluid hydrogen. Additionally, after signing a contract utilizing the Swiss products exchanging giant Trafigura in Sep 2021 for sea transport of ammonia and LPG from 2024, Glovis put requests for 2 large fuel providers (VLGCs). The organization will continue to attempt to secure brand new development machines, utilizing the sea transportation division likely to begin fuel delivery from 2024, along with volume (products and crude oil) and pure vehicle company (PCC) shipping.
1Q22 preview: positive forex prices and sound profits at sea transport unit to counterbalance reduced CKD volume
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We forecast 1Q22 sales of W5,497.5bn (+8.5% y-y) and OP of W318.6bn (+52.2% y-y; OPM of 5.8%). As ended up being the actual situation in 4Q21, lackluster finished vehicle and components deliveries due to production disruptions were most likely offset by favorable forex prices, noise non-auto/parts logistics, and powerful cargo prices.
Glovis is exchanging at a 2022E P/E of 7.9x and P/B of 1.1x. Uncertainties linger over an increase in trade amount led by a rebound in done vehicle production, that has been disturbed by international offer string bottlenecks and processor chip offer shortages. But, it really is welcome that non-auto/parts logistics tend to be broadening while the company is trying to secure brand new development machines via home based business endeavors, like the circulation of hydrogen and international circulation of made use of automobiles.
Source: Company korea
