Hyundai Rotem (064350 KS) (Buy) - Trading at 2027F 12.2x; expecting a re-rating

研报英文原文证据摘录

Hyundai Rotem (064350 KS) (Buy) - Trading at 2027F 12.2x; expecting a re-rating

Global Markets Research

Hyundai Rotem 064350.KS 064350 KS 11 June 2026

EQUITY: CAPITAL GOODS

Trading at 2027F 12.2x; expecting a re-rating Rating Remains Buy

Target priceMaintain Buy and TP of KRW350,000; remains our sector top Remains KRW 350,000

pick despite recent correction

Closing price

11 June 2026 KRW 188,400Maintain Buy and TP of KRW350,000, implying 85.8% upside; remains our sector top pick

We maintain our Buy rating and TP of KRW350,000 for Hyundai Rotem (HR). Our new TP Implied upside +85.8%is derived by applying 12MF EPS of KRW11,472 (previously: KRW9,216) to a target P/E

of 30.4x (previously: 37.7x). Our target P/E is the global peers’ 2026E average. Market Cap (USD mn) 13,418.4

The stock corrected 29.6% from its peak price on 5 May (vs. KOSPI up 11.4%) due to: 1) ADT (USD mn) 112.9

retail investors focusing more on the semi sector, 2) political disruptions at its target

exports countries, and 3) likely delays in the Middle East orders owing to ongoing Iran-US

disruptions. Relative performance chart

Despite the correction, HR remains our top pick in the Korea industrials sector.

Considering HR’s KRW30.1tn of overseas new order pipeline in 12MF, we believe 2027F

P/E of 12.2x is unreasonably discounted. We believe the stock is currently trading at a

47.7% discount (in terms of 2026F P/E) vs. Korea peers (Fig.14). On market cap/2026F

defense backlog, we believe HR is 6.1% undervalued vs. major peers on an average (

Fig.11). We estimate: (1) KRW50.4tn of potential overseas defense new orders in 2026-

27F (Fig.7), and (2) potential earnings upside from new contracts. A downside risk is

further delays in the Middle East orders due to the continuing war between Iran and US.