[Click eStock] Hyundai Mobis, Expectations for Governance Improvement... Target Price Upward Revision

On the 15th, Kiwoom Securities raised the target price for Hyundai Mobis to 165,000 KRW and upgraded its investment opinion to Outperform, indicating an expectation of outperforming the market.

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In a report released that day, Shin Yoon-chul, a researcher at Kiwoom Securities, stated, "Hyundai Mobis's announcement of its mid- to long-term business plan and shareholder return policy may serve as an opportunity to largely resolve investors' concerns who have approached the company's previously conservative stance compared to automakers from a corporate governance perspective." He analyzed, "This is expected to gradually ease the multiple discount related to chronic corporate governance issues."

Hyundai Mobis plans to hold a CEO Investor Day on the 19th of next month.

Researcher Shin predicted, "It is expected that Hyundai Mobis will use Hyundai Motor, which most recently held a CEO Investor Day within the Hyundai Motor Group, as a reference," and added, "The shareholder return policy of Hyundai Mobis is anticipated to introduce the concept of TSR and raise the medium-term total shareholder return (TSR) target to at least 20% or higher."

Shin also noted that considering Hyundai Motor plans to apply a TSR of 35% starting in 2025, the increase in dividends per share (DPS) due to Hyundai Motor's share buybacks and the rise in Hyundai Mobis's shareholding ratio will act as factors continuously expanding the dividend income Hyundai Mobis receives from Hyundai Motor.

He stated, "Hyundai Mobis may significantly expand the scale of shareholder returns (mainly through share buybacks) beyond the dividend income received from Hyundai Motor, aiming to improve its return on equity (ROE)."

He forecasted that third-quarter sales would reach 13.6 trillion KRW and operating profit 657.5 billion KRW, meeting market expectations.

Researcher Shin explained, "Sales are inevitably being revised downward due to weak third-quarter volume from automakers (such as sluggish industrial demand in the U.S., absence of new Kia models, and weak European BEV demand). On the other hand, the module and core parts divisions, which had continued losses in the first half due to quality costs, are expected to record profits, while the profitability of the A/S division, which is highly volatile due to USD exchange rate effects, is expected to deteriorate somewhat compared to the first half."

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