Eugene Investment & Securities, Hyundai Autoever target price ↓… “Physical AI sales delayed”

(Seoul = Yonhap News) Reporter Jeong Hoe-in = Eugene Investment & Securities [001200] announced on the 14th that it lowered its target stock price for Hyundai Autoever [307950] by 18% from 730,000 won to 600,000 won, saying that sales related to physical artificial intelligence (AI) are delayed in earnest. The investment opinion was maintained at 'buy'. The closing price of the previous trading day was 341,000 won.

Researcher Jae-il Lee predicted in the report that Hyundai Autoever's sales in the third quarter of this year would be KRW 1.22 trillion, up 15.7% from the same period last year, and operating profit would be KRW 74 billion, up 4.4% from the same period last year, generally meeting market expectations.

Researcher Lee explained, “Although the automotive software (SW) sector continued to slump, the high growth of the enterprise IT sector will lead to improved performance.”

However, the effect of the increase in the supply price of IT outsourcing (ITO) operating personnel, which was originally expected to be in the 3rd quarter, is expected to be postponed to the 4th quarter due to the contract being delayed.

He went on to say, “This is a temporary impact where the accumulated retroactive amount is temporarily reflected in the 4th quarter,” and predicted that GPU supply sales will also be recognized by about half in the 4th quarter of this year and the 1st quarter of next year, respectively.

The recovery of the automotive SW sector was also assessed to be slower than expected.

As the production of finished cars decreased due to the Hyundai Motors strike in the third quarter, it was estimated that sales of navigation systems installed in new cars also decreased.

However, the forecast for controller sales due to the introduction of software-centered automobiles remained the same as before.

The outlook for benefits from Hyundai Motor Group's investment in physical AI, which is considered a mid- to long-term growth engine, was also maintained.

Hyundai Motor Group plans to expand its conversion to a software defined factory (SDF) by 2030.

Accordingly, it is expected that Hyundai Autoever's smart factory system integration (SI) and IT outsourcing sales will increase, and its role in the robot SI and control system fields will also expand.

Researcher Lee predicted, “If GPU supply sales begin in earnest in the fourth quarter and investment in Saemangeum AI Valley begins in earnest, the scope of benefits may increase.”

However, he pointed out that the expansion of the Robot Manufacturing Automation Center (RMAC) and the timing of mass production and deployment of humanoid robots must be observed in the future.

Hyundai Autoever's operating profit this year is expected to be 278 billion won and next year's operating profit to be 363 billion won. The forecast for next year was raised by 2.7%.