[Click e-Stock] "Hyundai Motor's 2026 Earnings Estimates Raised... Target Price Up"

On October 31, Kiwoom Securities raised its target price for Hyundai Motor Company to 310,000 won. This adjustment was made after the Korea-U.S. summit, which made it certain that tariffs on automobile exports to the United States would be reduced to 15% or less within the year, prompting an upward revision of next year’s earnings estimates.

In the third quarter of this year, Hyundai Motor Company posted sales of 46.7 trillion won, up 8.8% year-on-year, while operating profit fell 29.1% over the same period to 2.54 trillion won.

Shin Yooncheol, a researcher at Kiwoom Securities, explained, "The impact of 1.821 trillion won in item tariffs was reflected in cost of goods sold, resulting in an average monthly tariff cost structure for U.S. exports of about 600 billion won, which was an increase from the previous quarter. However, about 60% of this was offset by non-price factors such as cost reductions and cuts in ordinary budgets."

Shin further stated, "With hybrid electric vehicles (HEVs) leading the way-accounting for 161,000 units and 15.5% of global wholesale sales-the sales mix improvement effect amounted to 1.2279 trillion won. This drove stronger-than-expected top-line growth, allowing Hyundai Motor Company to achieve its highest-ever third-quarter sales, which is a positive sign."

On October 29, a Korea-U.S. summit resulted in a bilateral agreement on tariffs. Under this agreement, the U.S. will lower its tariff on Korean automobiles from 25% to 15%.

Regarding this, Shin noted, "Given that the 25% item tariff rate was fully applied for three months in the third quarter, resulting in a monthly average cost structure of 600 billion won, once the 15% rate is applied, Hyundai Motor Company will be exposed to a monthly average item tariff of 360 billion won in arithmetic terms. If Hyundai Motor Company’s aggressive recovery efforts-offsetting about 60% of the tariff impact-continue, the effective monthly tariff burden is expected to be around 150 billion won."

He added, "Even with a conservative assumption of a 200 billion won monthly average, Hyundai Motor Company's earnings estimate for 2026 will inevitably be revised upward. We project that Hyundai Motor Company will achieve an annual operating profit of 13.2 trillion won and a net profit of 12 trillion won in 2026."

Shin concluded, "We believe Hyundai Motor Company’s stock is at the beginning of a rally, and we are raising our estimates for 2026 operating profit and net profit by 7.2% and 5.9%, respectively, compared to previous forecasts. Accordingly, we are also raising our target price to 310,000 won."

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