[Click eStock] Kia Motors Stretches Out in India... Expected to Offset Weakness in Chinese Market

Ranked 4th in India... Foreigners Also Increasing Their Share

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Kia Motors is expected to offset its sluggish performance in the Chinese market by continuing its success in the Indian market.

On the 21st, Samsung Securities issued a 'Buy' rating on Kia Motors and raised the target price by 12.7% to 62,000 KRW. The previous closing price was 47,800 KRW. This outlook is based on the expectation that Kia Motors will perform well in the Indian market. Odongryun, a researcher at Samsung Securities, stated, "Kia Motors rose to become the 4th largest company in the Indian market just one year after starting plant operations and is expected to return to profitability," adding, "From October, monthly sales are expected to exceed 20,000 units, surpassing sales volume in the Chinese market and offsetting the sluggishness there."

Kia Motors' India plant, which began operations in July last year, achieved a market share ranking of 4th thanks to the popularity of the 'Seltos'. Next month, production of the SUV 'Sonet' is expected to begin, with monthly production and sales anticipated to reach 20,000 units, surpassing sales in China. In terms of profitability, sales are expected to improve from 550 billion KRW in revenue and an operating loss of 50 billion KRW last year to 2.3 trillion KRW in revenue and 100 billion KRW in operating profit this year. Next year, sales are estimated to reach 4 trillion KRW with an operating profit of 220 billion KRW. If sales volume reaches 400,000 units, it is expected to exceed the peak equity-method profit of 370 billion KRW recorded in China during 2012-2013.

The proportion of foreign investors is also increasing. After surpassing Hyundai Motors at the end of last year, the gap is widening. As of the 15th, the foreign investor ratio was 39.1% for Kia Motors and 31.7% for Hyundai Motors. Researcher Oh explained, "Foreign investors are conservative about Hyundai Motors due to poor sales in the Chinese market, and additional growth is limited as it ranks 2nd in the Indian market," adding, "On the other hand, Kia Motors is increasing its market share in all major markets, and although it struggled in China, it can offset this with the Indian market."

Additionally, improvements in the product lineup, rising average selling prices (ASP), and growth momentum in electric vehicle sales are expected to drive stock price increases. Researcher Oh said, "The proportion of RVs in the second quarter of last year increased by 6.7% year-on-year to 53.7% and continues to rise," adding, "Following the launch of the 'Carnival' last month, the 'Sportage' will be launched in the first quarter of next year, and production of the 'Telluride' for the U.S. market will increase to 100,000 units."