[Click eStock] Hyundai Motor, Earnings Growth and Shareholder Return Commitment 'Target Price Up'

Hi Investment & Securities announced on the 10th that it maintains a buy rating on Hyundai Motor Company and raises the target price to 250,000 KRW. This reflects the upward revision of earnings estimates, applying a 12-month forward earnings per share (33,309 KRW) and the average price-to-earnings ratio (7.4x) of global competitors.

Researcher Cho Hee-seung of Hi Investment & Securities stated, "Concerns about demand slowdown, which had limited the stock price rise since the end of last year, and doubts about the sustainability of strong earnings have been resolved. The aggressive guidance based on enhanced brand competitiveness and the commitment to proactive shareholder return policies contributed to the recovery of investor sentiment. Even considering that specific business plans for battery sourcing have not yet been disclosed, the 12-month forward PER of 5.5x is judged to be excessive."

This year, since exchange rates and incentives inevitably turn into earnings reduction factors, the key issue is how much these can be offset. However, Hyundai Motor's fundamentals have improved compared to before amid production normalization and the transition to electric vehicles.

Researcher Cho explained, "We have raised Hyundai Motor's 2023 annual operating profit forecast from 9.7 trillion KRW (OPM 6.5%) to 11.1 trillion KRW (OPM 7.4%). The reason for expecting strong earnings is primarily that Hyundai records a stable increase in incentives compared to competitors." It is expected that the ability to manage incentive increases will become important in 2023, when the industry average incentives have fully turned upward. Next, he pointed out that new model launches of volume models are scheduled. The new car effects of the Grandeur GN7 and Kona SX2 will be reflected for a full year, and starting with the Avante facelift in March this year, the Sonata facelift, Santa Fe MX5, and Tucson facelift are scheduled for release in the second half of the year. Lastly, he noted the clear upward trend in market share in the U.S. market, centered on high value-added vehicle models.

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