[Click e-Stock] "Hyundai Motor Needs Earnings Improvement for Share Price to Rebound... Target Price Cut"

Shinhan Securities lowered its target price for Hyundai Motor from 780,000 won to 630,000 won on the 12th, saying an earnings improvement is needed for the share price to rebound. It maintained its “Buy” rating.

“We lowered our target price by 19.2% to reflect changes to our earnings estimates,” said Park Gwang-rae, a researcher at Shinhan Securities. “If earnings grow in 2027 and some value is recognized for new businesses such as robotics and autonomous driving, the share price could quickly rebound to the 400,000-won range. However, if earnings improvement is delayed and the value of the robotics business fails to come into focus, the stock will remain range-bound.”

Hyundai Motor’s operating profit for the third quarter of this year is forecast to fall 6.4% year over year to 2.37 trillion won, below market expectations of 2.79 trillion won. “The decline in sales volume to 920,000 vehicles, down 11.5%, had a significant impact,” Park said. “The strike disrupted production of 50,000 to 55,000 vehicles, while lower sales in South Korea (-27.2%), North America (-8.0%) and Europe (-18.1%) increased the fixed-cost burden.”

By division, operating profit is forecast to fall 7.1% to 1.59 trillion won in the automotive division and rise 10.1% to 582.3 billion won in the finance division. “Raw material costs in the first half were about 600 billion won higher than planned, and a similar burden is expected in the second half,” Park said. “However, the easing of U.S. tariffs and foreign exchange effects related to warranty expenses could partly offset this.”

Shinhan Securities forecast Hyundai Motor’s fourth-quarter operating profit to rise 28.8% to 2.18 trillion won. Global wholesale sales are expected to increase 1.0% to 1,043,000 vehicles, with a return to normal production in South Korea and increased deliveries of the new Avante and Tucson expected to drive a recovery in volumes. However, earnings are not expected to improve significantly despite the recovery in volumes. “The improvement in earnings will fall short of the recovery in volumes, as U.S. electric vehicle (EV) incentives and the burden from foreign exchange rates and warranty expenses persist,” Park said.

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