2022 Forecast: OP at KRW377.2bn (+28.4% YoY)
The author is an analyst of KB Securities. He can be reached at seongjin.kang@kbfg.com. -- Ed.
Maintain HOLD, raise target price 9.1% to KRW60,000
Despite raising our TP by 9.1% to KRW60,000, we maintain HOLD on Mando. Our revised TP reflects upward revisions to 2021E/2022E OP of 7.4%/6.6% based on the prospect of improving chip supply-demand dynamics. Derived using the DCF model (6.6% WACC; 1.9% TGR), our TP represents 12.1x implied P/E, 1.37x implied P/B and is 5.2% above Nov 22 close.
Investment points
Our investment points: (1) Growing shipments at non-HMG, Chinese clients; (2) Stronger ADAS technological capabilities on increased investments following spinoff of ADAS business; (3) High chassis market share, especially among leading EV makers. However, we believe these positives have already been priced in.
2022 forecast: OP at KRW377.2bn (+28.4% YoY)
We forecast 2022 OP at KRW377.2bn (+28.4% YoY), which is 4.0% above the market consensus. Component demand should increase as chip shortages subside. 2022 revenue should reach KRW6.4tn (+7.0% YoY). Improved operating leverage should lift OPM by 1.0pp YoY to 5.9%.
Risk factors
Upside risks to our HOLD rating are as follows:
(1) OP exceeds expectations on stronger-than-expected ADAS demand or improvement in HMG domestic shipments (1% rise in domestic revenue to push OP up by KRW6.4bn).
(2) OP exceeds expectations if China revenue is boosted by better trading at Chinese clients (1% rise in China revenue to boost OP by KRW3.6bn).