Korean construction equipment stocks gain on market recovery

HD Hyundai Infracore Co.’s 50t large excavator equipment [Courtesy of HD Hyundai Infracore]

South Korea’s construction machinery stocks that have remained sluggish over the past month rebounded Monday amid growing expectations for a demand rise in China and other advanced regions such as North America and Europe.

According to the Korea Exchange on Monday, major construction machinery stocks gained higher than the benchmark index.

Shares of Doosan Bobcat Inc. rose 3.8 percent to close at 53,800 won ($40.57) Monday while those of HD Hyundai Infracore Co. 4.5 percent to 10,420 won and HD Hyundai Construction Equipment Co. 2.9 percent to 71,000 won.

The gains were higher than the Kospi that finished at 2,543.41, up 0.96 percent from the previous trading session.

The upswing is believed to be coming from the anticipation of a recovery in the Chinese market, which follows improved demand in other regions such as North America, Europe, and the Middle East.

HD Hyundai Infracore is projected to achieve about 2.12 trillion won in sales in emerging countries and Korea this year, up 9.4 percent from the previous year.

According to Hanwha Investment & Securities Co., demand from the Middle East, including Saudi Arabia, will “continue to significantly contribute to emerging market sales this year and beyond,” while the expansion of compact lineups, including mini excavators, will also aid in achieving positive results in the North American and European markets.

The Chinese market is also expected to recover on the back of various economic stimulus measures and indications that the U.S.-China trade conflict is showing signs of easing following a recent visit by the U.S. Commerce Secretary to China, according to Seo Sang-young, an analyst at Mirae Asset Securities Co.

By company, HD Hyundai Infracore is seeing growth in its engines business that bring high operating margins.

Doosan Bobcat is anticipated to see an increase in the sale of industrial vehicles. According to Hanwha Investment & Securities, the boom in factories and the growing demand for forklifts in logistics centers in the U.S. is likely to lead to strong performance for North American industrial vehicles.

HD Hyundai Construction Equipment is competitive in mining development machinery sales. According to Kyobo Securities Co., the company’s direct exports rose 30 percent in the second quarter from a year ago thanks to the strong demand for mining development.