[Click eStock] "Innocean Achieves Best 3Q Performance in New Car 'Golden Cycle'"

Hyundai Motor and Kia Sales Increase Driving Performance Growth
Non-affiliated Companies' Share Also Rising... M&A Expanding Scale

[Asia Economy Reporter Minwoo Lee] Innocean recorded its highest quarterly performance again in the third quarter of this year, following the previous quarter. Analysts attribute this strong performance to the continued launch of new cars by Hyundai Motor and Kia, along with increased sales volume.

On the 10th, Daishin Securities maintained its 'Buy' rating and a target price of 90,000 KRW for Innocean, citing these factors. The closing price on the previous day was 59,400 KRW.

Innocean posted consolidated sales of 387.6 billion KRW and operating profit of 39.9 billion KRW in the third quarter of this year. This represents increases of 37.21% and 47.59%, respectively, compared to the same period last year. The results also exceeded market consensus estimates by 22.80% in sales and 14.02% in operating profit. Gross profit (GP) at headquarters increased by approximately 43% year-on-year to 40.5 billion KRW, while overseas gross profit rose about 12% to 130 billion KRW during the same period.

Lee Ji-eun, a researcher at Daishin Securities, explained, "The increase in sales of Hyundai Motor and Kia in the North American region, which accounted for 53% of gross profit last year, has led to continued performance improvement, achieving the highest quarterly results again following the previous quarter. Although there may be some slowdown in the fourth quarter, we expect solid performance comparable to pre-COVID-19 levels."

The strong performance is attributed to the 'golden cycle' of new car launches. After domestic release, new models have been consecutively launched in North America and Europe within one to three quarters. These include the Santa Fe Hybrid, Avante, Kona, Casper, K9, G90, Palisade facelift, Grandeur full-change model, and GV70 electric vehicle model since the second half of this year. Particularly, with the expansion of the Genesis lineup, brand marketing has been strengthened along with enhanced marketing for the N brand and electric vehicles. Next year, marketing efforts will also intensify in areas previously unexplored, such as hydrogen vehicles and autonomous driving, leading to continuous growth in internal sales performance among affiliates.

The proportion of non-affiliated companies is also increasing. It has already risen to about 32%, up 9 percentage points from 23% in the fourth quarter of 2019. The company has grown in scale through acquisitions such as Canvas in 2016, D&G in 2018, and Wellcom last year. This year, Deeperple was acquired to strengthen digital capabilities. The researcher added, "By continuing mergers and acquisitions (M&A) in the digital sector, Innocean is not only attracting non-affiliated advertisers but also enhancing digital agency services for Hyundai Motor and Kia. This important growth engine is well supported with a market capitalization of about 700 billion KRW, accounting for 58.3%."

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