March 22, 2019

[EQUITIES] ‘Mando to pick up from Q2’

PUBLISHED : June 14, 2018 - 14:20

UPDATED : June 14, 2018 - 14:20

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[THE INVESTOR] Mando will show improved earnings from the second quarter, said IBK Securities on June 14, maintaining a “buy” recommendation and 57,000 won (US$52.64) target price. 

Investors’ interest in parts makers including Mando has waned as Hyundai Motor recently had conflicts with its Chinese partner over unit price cut and use of locally-sourced parts. However, Mando supplies key parts such as brake system, steering and suspension that cannot be replaced unless proven for global standards, said analyst Lee Sang-hyeon.

The fact that eight global parts manufacturer are dominating the brake system supply to Chinese automakers validates this. Only about five Chinese companies are providing brake parts and they are mainly conventional ranges, according to the analyst. 

Mando’s first-quarter earnings were below market expectations, but in the second quarter, revenue will increase 3.9 percent on-year to 1.45 trillion won and operating profit by 12.9 percent to 62.4 billion won. While in the US it will still bear repercussions from inventory reshuffle, in China it will show signs of recovery. In the third quarter, in addition to a low baseline effect from ordinary wages, it will begin to supply parts for General Motors’ new model and gain from Hyundai’s launch of a new car in the US, forecast Lee. 

By Hwang You-mee (

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