Hy-Lok Korea is expected to see increased demand for fittings and valves due to expanded energy infrastructure investment in the U.S., presenting an investment opportunity based on undervalued performance.
Lee Tae-woo, MBN Gold Manager, cited profit-taking at the top of the trading range as the biggest reason for the recent index decline. He analyzed that the perception of technical resistance at the top of the trading range had a greater impact than the rapid rise in oil prices.
He explained that as the trading day progressed, the desire for profit-taking grew, which seemed to drive the index downward.
SK Hynix acquired 650,000 treasury shares, which positively impacted its stock price. This acquisition exceeded the average buying price of 1.6 million won until yesterday, leading to the stock price breaking 1.8 million won today.
Furthermore, foreign and institutional investors continued their net buying for four consecutive trading days, showing a positive inflow of capital into the market.
Manager Lee Tae-woo believes that the U.S. government is focusing all its efforts on stabilizing inflation ahead of the midterm elections, which inevitably includes efforts to control oil prices. This is also linked to attempts to ease Middle East risks.
Currently, strategic petroleum reserves are at historically low levels, limiting the expansion of supply, so efforts to stabilize oil prices through other means are expected.
SK Hynix's third-quarter performance may be somewhat sluggish due to the weakening effect of exchange rates. However, Manager Lee Tae-woo still assesses that the upward trend remains valid based on solid demand.
He maintained a positive long-term outlook, suggesting a target price of 2.1 million won, even if there is some adjustment in pace.
Sebang Battery announced a large-scale order exceeding 3 trillion won from Hyundai Motor and LG Energy Solution. This amount is more than nine times its annual revenue and is expected to contribute significantly to the company's external growth.
Through this order, Sebang Battery has laid the groundwork to enhance its corporate value and strengthen its market competitiveness.
Within the large-scale U.S. investment theme, news of energy infrastructure investments, such as gas power generation related to gas turbines, nuclear power, and the Alaska LNG project, led to strong capital inflows.
Of the total $350 billion in investment, approximately $150 billion is allocated to the shipbuilding industry, so benefits for shipbuilding are also anticipated.
The construction industry is considered one of the biggest beneficiaries of U.S. investment. This is because the value of EPC (Engineering, Procurement, and Construction) capabilities is continuously increasing, not only in the U.S. but worldwide.
Therefore, a long-term increase in the value of Korean construction companies with EPC capabilities, such as Hyundai Engineering & Construction, Samsung C&T, and Samsung ENA, is expected.
Manager Lee Tae-woo still views glass substrates as a theme, explaining that the biggest variable distinguishing a sector from a theme is the presence of a cycle. While related stock prices rose with Philoptics' unveiling of next-generation glass substrates, this is judged to be due to expectations for AI semiconductor demand and the effect of solving packaging heat issues.
However, he analyzed that it is still in the R&D investment stage, with insufficient full-scale mass production and large-scale orders, indicating a strong thematic movement.
Copper futures prices have surged approximately 50% over the past year. This is a combined result of supply shortages due to increased demand related to AI data centers and power grids, as well as the impact of U.S. tariffs.
Specifically, the phenomenon of copper inventory concentrating in the U.S. due to U.S. tariff policies is analyzed to be further strengthening the upward trend in copper prices.
Hy-Lok Korea received a rating indicating that it is approachable on dips, as its rise has been less significant compared to Sungkwang Bend. Increased demand for medium-sized modular units is expected to benefit fittings and valves, aligning with expanded LNG infrastructure investment for a positive outlook.
Despite operating profits of 58 billion won last year and an estimated 66 billion won this year, its performance is considered undervalued, making it highly attractive for investment.
Hy-Lok Korea is currently in the 8x P/E (price-to-earnings ratio) range compared to its 10-year average P/E of 10x, indicating low valuation burden. Based on this, Manager Lee Tae-woo set the initial target price at 38,000 won.
A phased buying approach is effective along with a trading range breakout strategy, and the stop-loss price was suggested at 27,500 won.
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