Kia Motors' Stock Remains 'Unmoved' Despite Announcement of Mid-to-Long-Term Vision

EV-related Plan Shortages Pointed Out... Many Target Prices 'Maintained'

Photo by Asia Economy DB

[Asia Economy Reporter Kum Bo-ryeong] Kia Motors announced its mid-to-long-term future strategy 'Plan S,' but the stock market reaction has been lukewarm.

According to the Korea Exchange on the 16th, Kia's closing price on the previous day rose by 0.12% (50 KRW) from the previous trading day to 41,200 KRW. Despite only one day passing since Kia announced its mid-to-long-term future strategy 'Plan S' and '2025 Financial and Investment Strategy' on the 14th, the stock price did not react significantly. Compared to the closing price of 40,450 KRW on the 13th, the day before the announcement, it only rose by 1.85%.

Plan S identified two core business strategies: electrification and customized mobility solutions. In particular, it emphasized a proactive transition to electric vehicles (EVs) regarding electrification. The EV lineup, which currently consists of only two models, will expand to four models in 2022 and eleven models in 2025. EV models will be added to existing models, and from 2022, EV models will be introduced across all Kia models. Through this, Kia plans to increase its global EV market share from 2.1% last year to 6.6% by 2025.

Kia will invest approximately 29 trillion KRW by 2025. Through cost reduction and mix improvement, it aims to grow its operating profit margin to 5% in 2022 and 6% in 2025. Strategies such as expanding the sales proportion of recreational vehicles (RVs), selling 300,000 units at the India plant in 2022, achieving 300,000 units of semi-knockdown (CKD) volume in emerging markets by 2023, and selling 1.05 million internal combustion engine vehicles in emerging markets were also presented.

However, despite the announcement of specific management strategies, there were criticisms that the EV-related plans are still insufficient. Kim Pyeong-mo, a researcher at DB Financial Investment, said, "Regarding the EV strategy, competitors in Europe plan to have up to 10 EV lineups by 2021-2022," adding, "Considering this, it is hard to see Kia's plan as aggressive compared to competitors." Kim Jun-sung, a researcher at Meritz Securities, also analyzed, "Carbon emission regulations have started in Europe, but in the first half of this year, when production capacity expansion is underway, it is expected to be difficult to achieve the necessary sales volume to avoid penalties."

Despite this event, securities firms did not raise their target stock prices. Korea Investment & Securities maintained a target price of 46,000 KRW, Hana Financial Investment 50,000 KRW, DB Financial Investment 40,000 KRW, and Shinhan Financial Investment 53,000 KRW. Meritz Securities lowered its target price from 52,000 KRW to 50,000 KRW.

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