[Click eStock] "Hyundai Motor, Expected Benefit from 'Value-Up'... Target Price Raised from 250,000 to 300,000"

Expectations for Undervaluation Resolution Aligned with Government Policy Direction
PBR Currently 0.67x, Possible Increase to 0.82x
Hyundai Motor Shareholder Return Rate Around 30%...Aligned with Policy Direction

DS Investment & Securities stated on the 29th that expectations for the resolution of undervaluation due to policy direction indications regarding Hyundai Motor Company continue, and thus raised the target stock price by 20% from the previous 250,000 KRW to 300,000 KRW. The investment rating of 'Buy' was also maintained.

Choi Tae-yong, a researcher at DS Investment & Securities, said, "On the 27th, the government indicated the continuity of policies to enhance the low price-to-book ratio (PBR), and this expectation is continuously reflected in the stock price," adding, "From a policy perspective, Hyundai Motor's PBR is 0.67 times, approaching 1, so the upside remains valid." He further stated, "Considering the uncertainties of the domestic value-up program, the target PBR is set at 0.82 times," and "the target stock price is raised by 20% to 300,000 KRW compared to the previous level."

The recently announced 'Corporate Value-Up Program' by the Financial Services Commission is based on voluntary participation by companies but includes partial mandatory elements, such as reflecting it in the Stewardship Code for pension funds (guidelines for institutional investors' voting rights). Researcher Choi said, "Considering the possibility of ETF inclusion, expectations for resolving undervaluation are expected to continue," and added, "Improved earnings, sustained favorable exchange rates, robust U.S. demand despite concerns, continued strength in hybrids, and the U.S. delay in electric vehicle (EV) transition plans create a favorable environment for Korean automakers." He also pointed out that the Hyundai Motor India (HMI) IPO planned for the second half of the year is likely to act as a revaluation factor.

Recently, major automakers have been expanding shareholder return policies. U.S. GM announced a $10 billion share buyback in November last year. Ford set a target dividend payout ratio of over 40%. Hyundai Motor's dividend payout ratio for 2023 is about 25%, aligning with the global average of 25-30%. As part of a three-year mid-to-long-term shareholder return policy, maintaining a dividend payout ratio above 25% along with plans to annually retire 1% of treasury shares (3% held) remains valid in 2024. Including the planned treasury share retirements (scheduled by April), the 2023 dividend payout ratio reaches approximately 30%.

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