On Monday, JPMorgan upgraded HL Mando (204320:KS) (OTC: MDOMF) from Neutral to Overweight, maintaining a price target of KRW50,000. The firm noted that despite challenges from major Original Equipment Manufacturers (OEMs), HL Mando reported steady second-quarter results for 2024. The company's revenue was stable at W2.1 trillion, marking a 3% year-over-year increase, attributed to customer base expansion and increased content per vehicle.
HL Mando's operating profit (OP) rose 16% year-over-year to W90 billion, with an operating profit margin (OPM) of 4.2%. The analyst highlighted that HL Mando's earnings have historically depended on a few key customers. However, the company has recently diversified its operations, showing resilience in its second-quarter earnings amid fluctuating demands from different regions and powertrains.
The firm emphasized HL Mando's successful engagement with leading OEMs and new business opportunities arising from Chinese companies aiming for global reach and Indian firms seeking to upscale their products. HL Mando's strong order backlog of W11.5 trillion in the first half of 2024, achieving 76% of its annual target, was pointed out as evidence of its competitive edge.
The analysis concluded with the observation that HL Mando's shares have seen a correction of approximately 20% from their peak in June 2024, while the KOSPI index rose by 2%. Based on these factors, JPMorgan reiterated its June 2025 price target of KRW50,000 and upgraded the stock to Overweight, citing a favorable risk-reward scenario for HL Mando.
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