Hyundai Motor Misses Consensus in Q4... 2020 Luxury Cycle as Momentum

[Asia Economy Reporter Oh Juyoun] Hana Financial Investment expects Hyundai Motor's fourth-quarter earnings last year to fall short of consensus, but sees the luxury model cycle in 2020 as a momentum for market share growth. Given the low valuation and upcoming momentum strengthening, it forecasts a higher possibility of a rebound rather than further stock price decline.

Hyundai Motor's fourth-quarter 2019 revenue and operating profit are expected to increase by 6% and 111% year-on-year to KRW 26.7 trillion and KRW 1.06 trillion, respectively. The operating profit margin is analyzed to rise to 4%, due to a base effect from one-time losses in other segments in the fourth quarter of 2018. However, it is explained that these figures slightly fall short of market expectations.

In 2020, the luxury model cycle, led by the GV80 (Q1), G80 (Q2~Q3), and GV70 (Q4~Q1 next year), is expected to be a momentum for market share increase and mix improvement.

Researcher Song Seonjae said, "Hyundai Motor has set a wholesale sales target of 4% growth to 4.576 million units in 2020," adding, "The domestic and overseas sales targets are 732,000 units and 3.844 million units, representing changes of -1% and 4%, respectively."

He explained, "The reason for expecting a decline in domestic sales is that the end of the individual consumption tax cut policy is likely to cause overall sluggish domestic automobile demand. However, considering that many partial facelift and all-new models such as Grandeur, Avante, Tucson, Kona, GV80, and G80 will be introduced, there is a high possibility of exceeding the target."

He further explained that the 4% increase in overseas sales target is based on the low base in 2019 and new model launches, which are expected to improve sales in the US, India, and China. In the US, the existing Palisade will be reflected for the full year, and new Sonata, Avante, and Tucson models will be sequentially introduced. In India, sales are expected to increase due to market demand recovery, the full-year effect of the Venue launched last year, and the introduction of the new Creta.

Researcher Song said, "In China, the new Mistra, MPV new model, and new Avante will be introduced, and in Europe, the new Kona EV will be launched as part of the strategy to meet carbon dioxide emission regulations."

This content was produced with the assistance of AI translation services.