2Q26 OP misses; annual earnings forecast remains unchanged: Maintain Buy and lower TP to KRW310,000; remains our sector top pick despite recent correction

研报英文原文证据摘录

2Q26 OP misses; annual earnings forecast remains unchanged: Maintain Buy and lower TP to KRW310,000; remains our sector top pick despite recent correction

Global Markets Research

Hyundai Rotem 064350.KS 064350 KS 24 July 2026

EQUITY: CAPITAL GOODS

2Q26 OP misses; annual earnings forecast remains unchanged Rating Remains Buy

Target priceMaintain Buy and lower TP to KRW310,000; remains our Reduced from KRW 310,000sector top pick despite recent correction KRW 350,000

Maintain Buy and lower TP to KRW310,000, implying 95.7% upside; remains our top pick Closing24 July 2026price KRW 158,400

We maintain our Buy rating and lower our TP to KRW310,000 (from KRW350,000) for Hyundai

Rotem (HR). Our new TP is derived by applying 12MF EPS of KRW11,647 (previously: Implied upside +95.7%

KRW11,502) to a target P/E of 26.9x (previously: 30.4x). Our target P/E is the global peers’

2026E average P/E with a 15% discount. We have adjusted the 15% discount to reflect Market Cap (USD mn) 11,786.2

escalation of the Middle-East conflict, which could lead to further delays on new orders from the ADT (USD mn) 95.1

region.

Relative performance chartDespite the recent stock price correction of 41.1% since 5 May (vs KOSPI’s -3.6%) caused by: 1)

delays in overseas new orders, 2) escalation of the Middle-East conflict, and 3) 2Q26 earnings

miss, HR remains our top pick in the Korea industrials sector. We focus on: 1) strong overseas

new order momentum, and 2) unreasonably discounted valuation. We forecast HR to receive

KRW30.1tn of overseas new orders in 12MF. We believe the stock is currently trading at a

56.0% discount (in terms of 2026F P/E) vs. Korea peers (Fig.14). On market cap/2026F

defense backlog, we believe HR is 11.7% undervalued vs. major peers on an average (Fig.11).