[Click eStock] "Focus on Hyundai Motor Group Governance Restructuring Scenario"

Daishin Securities stated in a report titled "Hyundai Motor Group, Review of Investment Strategy for Governance Restructuring" on the 17th that "the trigger for Hyundai Motor Group's value-up after expanding shareholder return policies is governance improvement."

On the 14th, volatility in Hyundai Mobis' stock price increased due to rumors about the health issues of Honorary Chairman Chung Mong-koo. This was because the possibility of Hyundai Motor Group's governance restructuring had expanded. On the same afternoon, Hyundai Mobis announced through a disclosure that the related news was groundless. In the short term, the possibility of Hyundai Motor Group's governance restructuring was settled. Researcher Kim Gui-yeon of Daishin Securities said, "The expansion of the possibility of Hyundai Motor Group's governance restructuring increased the volatility of related affiliates' stock prices, reaffirming market interest," and added, "It is necessary to review issues and investment strategies related to Hyundai Motor Group's governance restructuring."

Since the beginning of the year, market interest in shareholder return policies has expanded due to the government's value-up policy. Since 2021, Hyundai Motor Group has continuously strengthened shareholder return policies centered on finished cars in line with improved profit capacity. Hyundai Motor Company still has market expectations for additional share buyback policies. Reflecting these expectations, stock prices have continued to rise, and after the actual policy announcement, it was judged that the trigger for Hyundai Motor Group's value-up would be 'governance improvement.' The core of Hyundai Motor Group's governance restructuring is analyzed as inheritance by major shareholders, strengthening control, and resolving circular shareholding. Researcher Kim emphasized that in this process, there should be no conflicts of interest among group stakeholders and that efficient cost execution is necessary.

The major shareholders' shareholding ratios in Hyundai Motor Group's Hyundai Motor, Kia, and Hyundai Mobis are 8.1%, 1.8%, and 7.6%, respectively. Based on market capitalization, this means controlling group affiliates worth 159 trillion KRW with shares worth 7 trillion KRW. To maintain a stable management system, it is essential to expand major shareholders' shareholding ratios in core affiliates. Considering the current governance, market capitalization, and major shareholder shareholding trends, it is expected that group control will be strengthened through expanding Hyundai Mobis shares to Hyundai Motor and Kia.

The governance restructuring scenario for Hyundai Motor Group can be divided depending on whether Hyundai Mobis is split, capital increased, or major shareholders contribute shares in kind. Currently, it is judged that the strategy to secure Mobis shares in the mid-to-long term without splitting, capital increase, or contribution in kind is highly likely to continue.

Researcher Kim Gui-yeon said, "Although short-term volatility response strategies due to noise may be effective, ultimately, attention should be paid to the sustainability of value-up centered on finished cars." It is difficult to convince the market of the rationale for governance restructuring to strengthen major shareholder control, and in the absence of legal deadlines, it is possible to secure mid-to-long-term resources for Mobis share acquisition using major shareholders' holdings. It was analyzed that continuous interest should be maintained in finished car and major shareholder shareholding stocks (such as Hyundai AutoEver, Hyundai Wia, etc.).