Business · Markets · 1 hr ago
Brokerage cuts Hyundai Rotem target price over delayed defense orders
Kiwoom Securities lowered its Hyundai Rotem target price from 240,000 won to 195,000 won but kept its Buy rating.
The brokerage said delays in new defense orders could weaken the company's profitability next year.
Hyundai Rotem's third-quarter operating profit fell 11.1% from a year earlier to 247.1 billion won, below analysts' average estimate of 273.7 billion won.
Defense sales and operating profit both declined year on year, although exports to Poland helped export profitability recover to the high 30% range.
More domestic production is expected to reduce margins, because it is less profitable than exports; its share of defense revenue is forecast to rise by about 10 percentage points next year.
The delayed orders could force changes to 2027 production plans, despite progress on Poland's second K2 tank contract.
Hyundai Rotem shares fell more than 10% early on October 20 after the company reported third-quarter operating profit below market expectations.
Seven securities firms cut their target prices for the company, citing delayed defense orders and concerns about next year’s earnings.
Hyundai Rotem’s third-quarter operating profit was 247.1 billion won, down 11.1% from a year earlier and about 10% below forecasts.
Profitability in the defense business improved as production of Poland’s second K2 tank order stabilized, but analysts said follow-up orders remained uncertain.
All seven securities firms cited by Hankyung maintained their buy ratings.
- Who
- Hyundai Rotem and securities firms covering the company.
- What
- Hyundai Rotem shares fell, and securities firms cut their target prices amid weaker-than-expected results and concerns about delayed defense orders.
- When
- October 20, 2026; the share decline was reported early in the trading session.
- Where
- South Korea’s stock market.
- Why
- Third-quarter operating profit missed market expectations, while delays to new defense orders raised concerns about future earnings.
This story does not have two clearly opposing sides.
Hyundai Rotem reported third-quarter results that fell short of market expectations.
The company’s shares fell by more than 10% early in trading as securities firms cut their target prices.
Analysts said many expected orders could be postponed and warned that delayed new orders could weigh on earnings.
- Third-quarter operating profit
- 247.1 billion won, down 11.1% year on year
- Third-quarter revenue
- 1.6207 trillion won, up 0.1% year on year
- Early share price
- 89,500 won at 9:20 a.m., down 11.12% from the previous trading day
- Securities firms
- Seven firms lowered their target prices and maintained buy ratings
- Kiwoom Securities target
- Cut from 240,000 won to 195,000 won
3 sources
What people are saying
Many of the order pipelines expected within this year are likely to be postponed until next year.
Defense profit margins rebounded as production of Poland’s second order stabilized, but additional orders are key.
We lowered the target price to reflect falling defense stock prices, greater uncertainty in the order pipeline, lower earnings estimates due to a worsening business mix next year, and multiple adjustments.