SEOUL, KOREA - KTB Investment & Securities said on August 20 that the recent capacity expansion by Hyundai Hysco in China has made the growth potential of the company more credible.

 

It, however, maintained the investment opinion on the stock at "buy" and the target price at 110,000 won. Hyundai Hysco recently broke the ground for the fourth and fifth steel works in China in Chongqing and Cangzhou (Hebei Province). 

 

The two plants will be completed by the second half and first half of 2016, respectively, with their capacities in the future rising up to steel sheets for 450,000 and 300,000 cars.

 

Shim Hye-sun, KTB Investment & Securities analyst, said, "By 2020 Hyundai Hysco plans to expand its overseas capacity to steel output equivalent to 4.31 million to 6.67 million cars. Of these, Chinese output will account for as much as 61 percent."

 

As the sales revenue of its Chinese operations rises, its profitability is expected to increase as well. That's largely because the profit margin of its Chinese steel service centers is twice higher than that for other overseas centers. She added, "Based on the stable stream of income, this is the time for the company to expand its steel service center network across the world and add capacity for the lightweight automobile initiative."