Despite Strong Performance, Kia Remains Cheap at Half the Price of Hyundai Motor [Click e-Stock]

Shareholder Returns Likely to Increase if Hyundai Mobis Stake is Sold

There is an analysis suggesting that Kia, which has shown relatively lackluster stock performance among automakers, deserves attention. This is because, despite its outstanding performance, it is undervalued compared to Hyundai Motor Company and Hyundai Mobis.

On June 2, Samsung Securities raised Kia's target stock price by 4.3% to 240,000 won, maintaining its "Buy" recommendation for this reason. The previous day's closing price was 169,900 won.

Samsung Securities judged Kia to be the most undervalued mobility stock in the global market. As of the end of the first quarter this year, Kia's net cash (approximately 19.6 trillion won) combined with the value of its stake in Hyundai Mobis (12.6 trillion won) alone amounts to about half of Kia's market capitalization. The firm explained that even if Toyota's price-to-earnings ratio (PER) of 10 is applied, the target price of 240,000 won should be easily achievable.

The valuation of Kia’s PER at about 50% of Hyundai Motor Company’s is also considered excessive. It is noted that Kia's stake in Boston Dynamics is around 18%, lower than Hyundai Motor Company’s 27%, and its stake in Robotics Lab is 45%, also less than Hyundai Motor Company’s 55%, leading to a gap in asset value. However, as the initial public offering of Boston Dynamics becomes more visible, there is a high possibility that Kia will sell its 18.1% stake in Hyundai Mobis. It is expected that the cash generated in this way will further enhance Kia's ability to reward shareholders.

Kia's own profitability is also considered to be at a significant level. Thanks to the increased proportion of hybrids and balanced sales growth across all markets, Kia’s expected operating margin for this year is 8.4%. With the highest level of profitability globally, Kia has already surpassed Toyota. Eunyoung Lim, a researcher at Samsung Securities, stated, "There is a high likelihood that Kia will overtake Toyota in terms of used car value in the U.S. market, where Toyota currently leads," adding, "Just as we have seen in the cases of Samsung Life Insurance or LG Chem, a rise in the value of Kia's equity holdings will inevitably drive up its stock price over time."

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