[Click eStock] "Kia's Profitability Higher Than Hyundai Motor's"... Target Price '115,000'

[Asia Economy Reporter Ji Yeon-jin] Yuanta Securities announced on the 12th that Kia has recently recorded an operating profit margin (OPM) surpassing Hyundai Motor for several years, raising its target stock price to 115,000 KRW.

Hyunsoo Lee, a researcher at Yuanta Securities, said, "Kia recently changed its company name, removing the word 'cha' (car). Ironically, Hyundai Motor has three business divisions,

whereas Kia has only one business division, 'cha,' and Kia has a business structure that is more 'car'-like than Hyundai Motor," adding, "the business structure changes expected after this name change could be greater than anticipated."

Global automobile sales this year are estimated to increase by 9.4% compared to the previous year. Kia's sales are expected to grow by 12.5%, expanding its market share. Like Hyundai Motor, Kia is also focusing on the electric vehicle (EV) market. Within the group, following Hyundai Motor's Ioniq 5, Kia plans to unveil the 'EV6,' the second EV based on the dedicated electric vehicle platform (E-GMP), this month. Kia's global EV (EV+PHV) market shares last year were 2.5% and 2.4%, respectively, rising by 0.4%p and 0.8%p from the previous year. Excluding models with unclear classification depending on the country, the actual market share is estimated to be even higher.

Kia and Hyundai Motor have very similar business structures, so the differentiation is not significant. Their main domestic and overseas markets mostly overlap. The trends in sales volume and operating profit direction are also similar. Hyundai Motor's possession of the Genesis brand is pointed out as a differentiating factor. Lee said, "Recently, changes have been appearing between Kia and Hyundai Motor, and that is precisely profitability," adding, "although there are variables called one-off factors, since 2018, Kia's OPM has started to show levels similar to Hyundai Motor's, and in 2019-2020, it even exceeded it, with 2021 also expected to record a higher level."