[Click e Stocks] SUV New Car Replacement Cycle Begins... Kia Motors Outlook for This Year 'Clear'

Operating Profit of 2.5 Trillion KRW Last Year... 220% Increase YoY
Maximizing Overseas Sales Mainly in China and India

[Asia Economy Reporter Minwoo Lee] Last year, Kia Motors achieved a performance where operating profit more than doubled compared to the previous year. With its main SUV models entering the replacement cycle and an increase in overseas volume, strong performance is expected again this year.

On the 23rd, Kia Motors announced that last year it recorded sales of 58.846 trillion KRW and an operating profit of 2.547 trillion KRW. Sales rose 8.6% compared to the previous year, and operating profit increased by over 220%. Despite a slight increase in warranty costs (141 billion KRW), the new car effect amounting to 313 billion KRW and the impact of exchange rates resulted in a gain of 37 billion KRW.

As the replacement cycle for the main SUV models approaches, it is expected that strong performance will continue this year, supported by the full-scale new car effect. Through a conference call, Kia Motors set its wholesale sales target for 2020 at 2.96 million units, an increase of 4.9% (139,000 units) from the previous year. Min Kyung Kim, a researcher at Mirae Asset Daewoo, said, "Despite the industry demand outlook not being very bright, setting a somewhat high target reflects confidence in the new car replacement cycle," adding, "Last year, operating conditions such as incentives, inventory, and costs were improved, and this year, the effect of four new models will be maximized."

In particular, sales are expected to increase in the China and India regions. Kia Motors set targets of 310,000 units (an increase of 51,000 units) for China and 124,000 units (an increase of 79,000 units) for India. Researcher Kim explained, "With steady demand and supply stabilization acting as positive factors in India, if a rebound in China is successful, the stock's attractiveness is expected to increase significantly."

Mirae Asset Daewoo gave Kia Motors a 'Buy' investment rating with a target price of 53,000 KRW. The closing price the previous day was 42,600 KRW.