"Hyundai Mobis Business Restructuring, Preemptive Measure for Group Governance Reorganization"

Prospects for Restructuring Major Shareholdings Centered on Hyundai Mobis

[Asia Economy Reporter Minji Lee] Yuanta Securities analyzed on the 22nd that Hyundai Mobis should be interpreted as a preliminary step toward restructuring the governance as the ultimate controlling company.

Recently, Hyundai Mobis announced plans to separate its module and parts manufacturing divisions by establishing two corporations, with Hyundai Mobis holding 100% of the shares in these new entities. The newly established module integration subsidiary will consolidate the Ulsan, Hwaseong, and Gwangju plants, while the parts integration subsidiary will consolidate the airbag, lamp, braking, steering, and electrification parts plants.

Last year, Hyundai Mobis recorded sales of 41.7 trillion KRW, with modules accounting for 33.2 trillion KRW and A/S for 8.4 trillion KRW. Operating profit was 2.04 trillion KRW, with modules generating 155.1 billion KRW and the A/S division 1.88 trillion KRW. Namgon Choi, a researcher at Yuanta Securities, stated, “Most of the profits were generated by the A/S division,” adding, “It can be interpreted that low-profit business units are spun off as subsidiaries, while high-profit and growth-potential areas remain within Hyundai Mobis.”

The restructuring of Hyundai Mobis’s business structure is analyzed to have no direct connection to the governance restructuring of the Hyundai Motor Group. For the Hyundai Motor Group’s governance restructuring to occur, it is necessary to resolve the circular shareholding by eliminating the 23% stake in Hyundai Mobis held by Kia Motors and Hyundai Steel, as well as to carry out the share succession process from Honorary Chairman Chung Mong-koo to Chairman Chung Eui-sun.

However, since Hyundai Mobis is positioned as the ultimate controlling company, it is reasonable to interpret this as a preliminary step toward governance restructuring. Researcher Namgon Choi explained, “According to the governance restructuring roadmap announced in 2018, the 7.17% share succession from former Chairman Chung Mong-koo to Chairman Chung Eui-sun will eventually take place,” adding, “Ultimately, Chairman Chung Eui-sun will reorganize his shareholdings centered on Hyundai Mobis.”

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