[Click eStock] "Hyundai Motor, a Crucial Time for Production Normalization"

Recent Inventory Has Begun to Become Extremely Scarce
Shinhan Financial Investment "Maintains Hyundai Motor Target Price at 270,000 Won"

[Asia Economy Reporter Gong Byung-sun] Last year, Hyundai Motor showed solid performance despite the prolonged shortage of automotive semiconductors. However, the time has come when normalizing production is becoming crucial as inventory is running low recently.

On the 11th, Shinhan Financial Investment estimated Hyundai Motor's Q4 sales last year to be 30.2 trillion KRW, up 3.1% year-on-year, and operating profit to be 1.76 trillion KRW, up 40.3% during the same period. The operating profit was about 10% below market expectations.

In Q4 last year, Hyundai Motor was expected to increase production due to seasonal peak demand and production normalization. However, automotive semiconductor shortages and external factors such as cold waves caused logistics disruptions. By country, domestic and China markets grew by 20.2% and 49.1% respectively compared to the previous quarter, but Europe and India declined by 5.3% and 16.9% respectively, showing some sluggishness.

So far, despite semiconductor shortages, automakers have shown solid performance, but this year is expected to be a critical time for production normalization. After the surge in new car demand post-COVID-19, production decreases led more to vehicle price increases and inventory depletion rather than fixed cost burdens. Jeong Yong-jin, a researcher at Shinhan Financial Investment, explained, “This year, actual production expansion has become more important than pricing and inventory policies because dealer network inventories have become extremely low recently.”

Hyundai Motor set a global sales target of 4.323 million units this year, an 11.1% increase from the previous year. This figure reflects confidence in production normalization, influenced by the launch of a new Indonesian plant capable of producing 150,000 units. Although semiconductor supply remains unstable, the expectation for production normalization is due to increased production flexibility through the development of alternative materials and shared component utilization.

Accordingly, Shinhan Financial Investment maintained its investment opinion of “Buy” on Hyundai Motor with a target price of 270,000 KRW. The closing price on the previous day was 215,000 KRW.

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