[Click eStock] "Hyundai Mobis, Model Competitiveness Recovery Offsets Risks"

Cold Wave in Texas Followed by Fire at Japan Renesas Factory Causes Semiconductor Supply Emergency
Hyundai Car Model Competitiveness Recovers... "Global Market Share to Rise to 9% by 2025"

[Asia Economy Reporter Gong Byung-sun] The shortage of automotive semiconductors and intense competition in the electric vehicle market have emerged as risk factors for Hyundai Mobis. It is interpreted that if Hyundai Motor Group's shipments fall short of expectations, Hyundai Mobis will also suffer damage. However, an analysis suggests that the upward revision of the combined global market share forecast for Hyundai Motor and Kia Motors offsets these risk factors. Accordingly, KB Securities raised the target price for Hyundai Mobis from the previous 290,000 KRW to 370,000 KRW, maintaining a 'Buy' investment rating.

According to KB Securities on the 25th, the shortage of automotive semiconductors appears to be adversely affecting Hyundai Mobis as well. Following a large-scale power outage caused by a cold wave in Texas, USA last month that halted semiconductor production plants, a fire broke out on the 19th at Renesas's semiconductor plant in Ibaraki Prefecture, Japan, making the supply of automotive semiconductors even more difficult. As a result, government officials visited Taiwan earlier this month to request semiconductor procurement, indicating that demand is outpacing supply. KB Securities analyst Kang Sung-jin said, "If Hyundai Motor's shipments fall short of expectations due to semiconductor shortages, it could emerge as a risk factor."

The intensifying competition in the electric vehicle market is also a risk factor for Hyundai Mobis. As Tesla leads the electric vehicle market, automakers such as Volvo and Renault-Nissan have announced plans to focus on the electric vehicle market. Even Volkswagen has stepped up to produce batteries in-house, causing LG Energy Solution and SK Innovation to lose orders. Although Hyundai Motor has released electric vehicle models like the Ioniq 5, there is a risk that the electric vehicle business may fail to grow in scale, which is considered a risk factor for Hyundai Mobis.

Nevertheless, KB Securities raised Hyundai Mobis's target price from 290,000 KRW to 370,000 KRW. This is because Hyundai Motor's model competitiveness has recovered, leading to growth in modules and key components. This is the result of expanding the lineup centered on internal combustion engine sports utility vehicles (SUVs) and improving product quality. Consequently, Hyundai Motor's market share in the U.S. increased from 3.8% in 2019 to 4.3% last year. Hyundai Motor's eco-friendly vehicle market share also rose from 6.9% in 2019 to 9.3% last year.

The upward revision of the combined global market share forecast for Hyundai Motor and Kia Motors is also a positive factor. Analyst Kang said, "Hyundai Motor's competitiveness in internal combustion engine vehicles has improved, and electric vehicles based on the dedicated electric vehicle platform (E-GMP) have also been launched," adding, "Hyundai Motor's global market share is expected to increase from 8% last year to 9%, up by 1 percentage point by 2025." This is equivalent to an annual shipment increase of 8.8 million units.