[Click eStock] "Hyundai Motor, Global Sales Growth Drives Performance"

Shinyoung Securities "Maintain Hyundai Motor Target Price at 310,000 KRW"
North American Earnings Especially Drive Performance Improvement

[Asia Economy Reporter Gong Byung-sun] Despite a decline in domestic sales, Hyundai Motor's overseas sales contributed to an increase in performance. Going forward, securing inventory in the North American and European markets is expected to be the key to second-half performance.

On the 5th, Shin Young Securities forecast that Hyundai Motor's sales in the second quarter of this year will reach 28 trillion KRW, a 30% increase compared to the same period last year, and operating profit will increase by 247% to 2 trillion KRW. Sales are in line with market consensus, and operating profit exceeds consensus by 10%.

Although domestic sales decreased, overseas sales drove growth. The domestic sector in the second quarter of this year showed an 11% decline compared to the same period last year, reflecting a strong performance in the second quarter of last year. However, overseas sales led the performance. Sales in North America increased by 68%, Europe by 109%, and India by 306% compared to the same period last year. In particular, the average selling price (ASP) per vehicle decreased by $1,282 (approximately 1.45 million KRW) compared to the same period last year, which is expected to strengthen the performance improvement in North America.

In the second half of the year, recovering demand in North America and Europe through inventory replenishment is important. At the end of last month, global inventory fell to 1.7 months, the lowest since 2014. This is close to the U.S. regional inventory, which is at a record low of 1.4 months since 2008. Researcher Moon Yong-kwon of Shin Young Securities said, “Following the Tucson, the pickup truck Santa Cruz will be launched in the U.S. in the second half, so the effect of new cars in North America and a reduction in incentives are expected,” adding, “As long as the volume exported from Korea to the U.S. is not disrupted by strikes, it will be fine.”

The semiconductor shortage issue is expected to have a limited impact on profits and losses. In May and June, intermittent production disruptions occurred at the Jeonju, Asan, and U.S. plants due to semiconductor shortages, causing global shipments in the second quarter of this year to decrease by 11% compared to the same period in 2019. Researcher Moon said, “However, wholesale sales were defended with pre-produced inventory,” and “excluding China, consolidated wholesale sales increased by 43% compared to the same period last year, and this volume increase will drive performance.”

Accordingly, Shin Young Securities maintained its investment opinion of “Buy” on Hyundai Motor and a target price of 310,000 KRW. The closing price on the previous day was 239,000 KRW. Researcher Moon explained, “If there are no issues with the exported volume, performance improvement through volume recovery is possible in the second half.”

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