[Click eStock] "Kia to Exceed Market Expectations for Q1 Operating Profit"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 135,000 KRW for Kia on the 11th.

Kia's expected operating profit for the first quarter is 1.3181 trillion KRW, representing a 22.5% growth compared to the same period last year and is expected to exceed market estimates by 9.2%. Despite external challenges such as Russia's invasion of Ukraine in February and lockdowns in major Chinese cities in March, the company continues its strong performance trend.

Jinwoo Kim, a researcher at Korea Investment & Securities, said, "There are still market concerns regarding this year's challenging operating profit guidance (6.5 trillion KRW), so attention is focused on the first quarter results. If the first quarter results exceed consensus as expected, the earnings momentum will be further highlighted."

Minimizing the impact from Russia, the production increase effect in India, favorable KRW-USD exchange rates, and volume defense are expected to tighten the positive performance. Kia's wholesale sales in the first quarter were 685,000 units, down 0.7% from the previous quarter. Researcher Kim explained, "While redirecting export volumes destined for Russia to other regions, the Indian plant started three shifts from March, achieving a production increase effect of over 30%, which is a solid performance considering external conditions. Domestically, instead of maximizing profitability, a volume-maximization strategy was adopted to minimize production disruptions." The average KRW-USD exchange rate rose by 8.2%, offsetting major negative factors such as rising raw material costs.

In the second quarter, the production increase effect at the Indian plant is expected to be in full swing, and strong sales in the U.S. are projected to continue. Researcher Kim said, "Considering the delayed U.S. electric vehicle investments, we lowered the PER multiple from 11 times to 10 times, but the profit growth will offset this. Also, the upgrade of the Morgan Stanley Capital International ESG rating from CCC to B will positively reflect on supply and demand."

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