South Korea’s leading auto parts maker Mando Corp. is expected to deliver strong earnings backed by a recovery in the Chinese auto market and rising demand for advanced driver assist systems (ADAS), market analysts said.

After peaking at 289,000 won on September 27, Mando share price has been hovering around 250,000 won, reflecting lingering concerns that the company would report poor sales at home in the aftermath of the worst-ever strike at Hyundai Motor Co., Mando’s major customer, in Korea this year.

However, latest data from its Chinese operations has eased such concerns. In the second quarter ended June, Mando’s Chinese subsidiary that supplies parts to Chinese finished carmakers Geely and Changan Automobile raked in 149.7 billion won in sales, up 51.4 percent on year, and its operating profit margin came at 11 percent, doubling that of Korean operations.

The Korean auto parts maker’s brisk sales in China were largely attributed to the recent recovery in auto demand in China, market observers said. According to Chinese automotive industry data, a total of 2.27 million cars were sold in September in China, a 29 percent jump from the same period last year and highest monthly growth since January 2013.

Recovering car demand in the world’s largest auto market and Mando’s strong sales in China are expected to bode well for the Korean parts supplier’s earnings and stocks, market experts said.

A rosy outlook for Mando is also based on increasing employment of advanced auto technologies such as self-driving solution that requires ADAS technology. The ADAS is a system that is designed to assist a driver, alerting the driver of hazardous road conditions. The company posted 56 billion won in ADAS sales in 2013 and it is expected to report ADAS sales of 260 billion won this year.

BNK Investment & Securities Co. forecast Mando’s ADAS sales to climb to 540 billion won in 2020, as the number of cars installing ADAS systems is expected to sharply rise. Hyundai Motor will soon release the new model of its luxury sedan Genesis that is expected to come out with Mando’s ADAS solution.

Market analysts also cited the auto part maker’s shareholder-friendly policies, maintaining its annual dividend payment at around 50 billion won, as another positive factor that will help boost the company shares. Its dividend payout ratio for this year is estimated as 22.7 percent.

Mando shares closed Wednesday at 257,000 won, down 5,500 won or 2.1 percent, from the previous period

By Kim Dae-gi

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