Input 2021.02.02 16:00
According to the industry on the 2nd, Hyundai Construction Equipment, a subsidiary of Hyundai Heavy Industries Group’s excavator, is expected to see a sharp decline in last year’s performance. Daishin Securities (003540)Predicted that Hyundai Construction Equipment made an operating profit of 10 billion won last year, down 36.3% from the previous year. Sales were expected to decline by 11.8% to 2.5217 billion won. IBK Investment & Securities also predicted that Hyundai Construction Equipment’s operating profit declined 40.4% last year to 94 billion won, and sales fell 9.5% to 2.58 trillion won.
The sharp decline in excavator sales in the North American, European and Indian markets is considered to be the biggest factor in earnings deterioration. Sales in North America, the major market of Hyundai Construction Equipment, are expected to decline 36.7% from 2019, 23% in India and 14% in Europe. Doosan Infracore’s main subsidiary Doosan Bobcat (241560)This is in contrast to the increase in sales in the North American market.
An industry insider said, “Doosan Bobcat, which sells small excavators targeting the North American housing market, continues to enjoy a boom, while Hyundai Construction Equipment sells mid- to large-sized equipment mainly in the civil engineering market that was hit by the corona. The recovery is not clear,” he said.
Some are skeptical of the expectation that Hyundai Heavy Industries can leap to the’global top 5’after taking over Doosan Infracore. An employee of Hyundai Construction Equipment who requested anonymity said, “If you combine Doosan Infracore’s supply chain, there will be a mid- to long-term synergy effect, but as the cash cow Doosan Bobcat was omitted from the acquisition, there will be a limit to greatly increasing its overseas market share. I have a question.” After dividing Doosan Infracore into investment and business divisions, Doosan Group plans to sell the business division while leaving Doosan Bobcat, the group’s cash cow, in the investment division.
“There is a prediction that Doosan Engine will be applied to new Hyundai Construction Equipment products, but the engine is not a problem that can be changed in a short period of time due to various technical problems.” “You can’t change it quickly,” he said. Hi Investment & Securities Research Center also analyzed, “If Doosan Infracore engines are applied to new Hyundai Construction Equipment products from two years later, Doosan Infracore’s direct benefits will be greater than Hyundai Construction Equipment.”
On the other hand, ahead of the major shareholder change, Doosan Infracore also succeeded in a corporate bond box office with anticipation that its credit rating would rise. Previously, Doosan Infracore’s corporate bonds were not sold three times in a row up to a month ago, but as the Doosan Infracore China-related lawsuits were won and the sale proceeded smoothly, demand that was more than twice the amount of the recruitment amount of 110 billion won came last week.
Currently, Korea Credit Rating and Nice Credit Rating have listed Doosan Infracore’s credit rating on the BBB level as’subject to uncertainty review, etc.’. However, an industry insider said, “Hyundai Construction Equipment, which is smaller than Doosan Infracore, has a higher credit rating.”
Earlier, there were concerns about restructuring of Doosan Infracore employees after the sale, but internally, it is reported that they are not very concerned about this. An industry insider said, “It is not a sale that takes place in a situation where there is no competitiveness, but Doosan Infracore itself is in a competitive position as the industry’s No. 1, so in order to maintain this competitiveness, we will have to take the manpower composition as it is.”