60% Increase in 4 Months... Hyundai and Kia Racing Ahead, Thumbs Up Overseas Too

Hyundai Motor Eyes 200,000 KRW After 6 Years... Kia Motors Secures Top 10 Market Cap
Q4 Earnings Improvement and Rising Expectations for EV Platform
Chosen as Next-Generation EV Most Promising Stock by Overseas Analysts

[Asia Economy Reporter Minwoo Lee] Hyundai Motor and Kia Motors stocks are soaring. They have risen by about 60% compared to four months ago. Despite the economic downturn caused by the novel coronavirus disease (COVID-19), they posted solid performance and are gaining recognition for their competitiveness in the next-generation electric vehicle market, raising expectations.

On the morning of the 4th, Hyundai Motor recorded 199,000 KRW, up 1.27% from the previous day. This is the highest price since September 22, 2014, and it is on the verge of recovering the 200,000 KRW level for the first time in about six years. Following a 7.67% rise the previous day, it has been on an upward trend for two consecutive days. Compared to 127,000 KRW on August 2, it has risen 56.7% in four months. This is interpreted as expectations rising due to the anticipated performance improvement starting in the fourth quarter and the announcement of the next-generation electric vehicle platform E-GMP on the 2nd.

According to financial information provider FnGuide, Hyundai Motor's consolidated market consensus for the fourth quarter of this year forecasts sales of 29.4456 trillion KRW and operating profit of 1.7482 trillion KRW. Sales are expected to increase by 5.83% and operating profit by 50.14% compared to the same period last year. This represents a significant improvement compared to the third quarter, which posted a loss due to a provision of about 2.1352 trillion KRW related to the Theta2 engine recall.

The next-generation electric vehicle platform E-GMP announced by Hyundai Motor Group on the 2nd was also a positive factor. By modularizing and standardizing the design process, it is expected to quickly respond to market demands while enabling high quality and cost reduction. Seonjae Song, a researcher at Hana Financial Investment, predicted, "If sales of electric vehicles based on the new platform increase, fixed costs such as labor and R&D expenses will be rapidly alleviated, potentially boosting overall company profits by up to 20% by 2025."

Kia Motors is also experiencing a steep rise. From 39,700 KRW on August 3, it surged to 66,200 KRW in the early trading session on this day. This is a 66.8% increase over the past four months. It has more than tripled compared to the low point of 21,500 KRW on March 23. Based on the previous day's closing price, its market capitalization was 26.227 trillion KRW, ranking 10th on the KOSPI (excluding preferred shares). Since entering the top 10 in market capitalization on the 24th of last month, it has fiercely competed with LG Household & Health Care, ranked 11th, but recently widened the gap to over 2.4 trillion KRW, securing the 10th position. This marks a return to the top 10 in market capitalization for the first time in over four years since June 28, 2016.

Kia Motors was the only domestic automaker among the five major manufacturers to record increases in both domestic sales and exports in September and October. In the U.S. market, its sales in September surpassed Hyundai Motor's, and in October, it closely trailed Hyundai Motor's sales by just 1%. Despite reflecting quality costs of 1.2592 trillion KRW, its operating profit in the third quarter was 195.2 billion KRW. Excluding quality costs, it earned 1.4544 trillion KRW in profit.

The securities industry expects operating profit to exceed 1 trillion KRW in the fourth quarter for the first time in over seven years since the second quarter of 2013. DB Financial Investment researcher Pyeongmo Kim said, "With the average selling price rising in the fourth quarter and demand recovery in emerging markets such as India and Russia, sales volume will also increase. Since performance is expected to meet market expectations, the upward trend is likely to continue for the time being."

Hyundai Motor and Kia Motors are also attracting attention overseas. They are expected to lead the next-generation electric vehicle market and rise significantly. According to MarketWatch, a U.S. economic news outlet, on the 2nd (local time), an analysis of 165 stocks included in three major U.S. electric vehicle-related exchange-traded funds (ETFs) found that both Hyundai Motor and Kia Motors were included among the 20 promising next-generation electric vehicle-related stocks identified by foreign analysts. They forecast Hyundai Motor's and Kia Motors' stock prices to reach 228,884 KRW and 71,115 KRW respectively next year. They ranked 4th and 8th in terms of stock price growth rate among the selected stocks. Other Korean companies that made the list in large numbers include Iljin Materials (2nd), Hyundai Mobis (3rd), Samsung Electronics (9th), LG Chem (11th), and Samsung Electro-Mechanics (12th). The number of included U.S. companies (6) was even surpassed. Japan, Germany, and Canada each had only two companies included.