[Click eStock] Hyundai Motor, Car Profitability Disappointing but 'Sales Target Expected'

[Asia Economy Reporter Lee Seon-ae] Hi Investment & Securities stated on the 26th that it maintains a Buy rating and a target price of 320,000 KRW for Hyundai Motor Company. Although the profitability of the automobile division is disappointing, there remains an expectation of achieving the various annual guidance figures presented by Hyundai Motor.

Hyundai Motor's first-quarter earnings are expected to record sales of 31.9 trillion KRW (YoY +16.4%, QoQ +2.8%) and operating profit of 1.79 trillion KRW (YoY +8.1%, QoQ +17.0%). A profit decline is anticipated due to the vehicle semiconductor shortage, and thus the profitability of the automobile division is still expected to remain below 5%.

On the other hand, the financial division is expected to maintain a high profitability trend through the first half of this year. This is because the U.S. used car market is projected to stabilize significantly from the third quarter, when the vehicle semiconductor production capacity facilities are completed. Additionally, the CEO Investor Day is expected to be held during the first quarter of this year. Since this event, usually held in December, was postponed, market expectations for the event are high. Hyundai Motor officially announced through the 2021 fourth-quarter earnings conference call that its 2022 sales targets are 560,400 eco-friendly vehicles (YoY +33.8%) and 220,000 BEVs (YoY +56.3%), and that a more detailed update on the electrification business strategy will be shared at the CEO Investor Day.

Shin Yoon-chul, a researcher at Hi Investment & Securities, explained, "Along with the fourth-quarter earnings announcement, a favorable 2022 annual guidance was presented," adding, "The main points include global wholesale sales of 4.32 million units, consolidated sales growth rate of 13-14%, operating profit margin of 5.5-6.5%, automobile investment plan of 9.2 trillion KRW, automobile FCF of -0.5 to +1.0 trillion KRW, and a dividend per share at least equal to last year (1,000 KRW interim dividend / 4,000 KRW year-end dividend for common stock in 2021)."