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South Korean auto parts makers will likely continue to increase profits thanks
to China's automobile markets, a report said Wednesday.
Parts makers with high earnings contributions from Chinese subsidiaries, such as Mando Corp., Sungwoo Hitech Co. and Hwashin Co., are expected to enjoy sound earnings growth, Woori Investment & Securities said in a report.
"We believe that
China will continue to post leading global auto sales growth in 2013 thanks to
the Chinese government's likely introduction of economic stimulus and capacity
expansions via joint ventures with overseas automakers," said Cho Soo-hong, an
analyst at Woori Investment.
During the first eleven months of this year, China's auto sales recorded 140.3 million units, up 6.9 percent on-year.
Meanwhile, South Korean automakers' sound growth in China will continue, largely backed by Hyundai Motor Co.'s expanded capacity upon the start of operations at its third China plant in July 2012 and solid roll-out effects at Kia Motors following the launch of the K3 in September 2012.
Against the backdrop of solid sales growth at the domestic automakers in China, parts makers will post higher bottom-line growth, Woori Investment said.
Korean parts makers supply automakers in China through their 100 percent-owned subsidiaries, while automakers usually operate business in China through joint ventures with local companies.