[Click eStock] "Hyundai Motor Begins to Prove Structural Improvement"

Ebest Investment "Maintains Target Price at 330,000 Won"

[Asia Economy Reporter Gong Byung-sun] In Hyundai Motor Company's performance for the first quarter of this year, a clear improvement in the sales mix was observed. This has led to interpretations that structural improvements have begun. On the 23rd, Ebest Investment & Securities maintained a target price of 330,000 KRW and a 'Buy' rating for Hyundai Motor Company.

Although there were doubts about profit visibility, Hyundai Motor recorded solid results even in the off-season first quarter. In the first quarter of this year, Hyundai Motor's sales increased by 8.2% year-on-year to 27.3 trillion KRW, and operating profit rose by 91.8% to 1.657 trillion KRW. The operating profit exceeded the market expectation of 1.5 trillion KRW. By business division, the automobile segment recorded an operating profit of 1.1 trillion KRW with an operating margin of 5.5%, the finance segment recorded an operating profit of 530 billion KRW, and other segments recorded 77 billion KRW.

The clear improvement in Hyundai Motor's mix positively impacted the performance. Researcher Yoo Ji-woong of Ebest Investment & Securities analyzed, "While sales volume increased by 7% year-on-year, the mix effect relative to volume generated 800 billion KRW," adding, "The strengthening of the sales mix was largely due to the increase in Genesis sales volume, and the phenomenon appeared as incentives in various countries, especially in the U.S., declined."

Although supply delays in the finished car industry are expected to continue until May, the decline in operating rates is expected to stop from the third quarter. The semiconductor issue is expected to prompt the entire automobile industry to adjust production volumes of internal combustion engines. Researcher Yoo said, "With the expansion of Genesis, the automobile segment's operating profit, which is still at the 5% level, will clearly rise from the third quarter."

Accordingly, there are forecasts that the stock price will continue to recover. Researcher Yoo explained, "Profits are on the rise," and "A recovery in stock prices is expected based on profit momentum."