[Click eStock] "Kia, Better Profits Compared to Peers... Target Price Up"

Target Price Raised by 7.1% Compared to Previous Level

On the 15th, KB Securities reported that Kia is generating better profits compared to its peers and raised the target stock price from 140,000 KRW to 150,000 KRW. The investment rating was maintained at 'Buy.'

Kang Sung-jin, a researcher at KB Securities, stated, "Reflecting a better-than-expected model mix and favorable exchange rates, we have raised the operating profit forecasts for 2024 and 2025 by 11.6% and 18.2%, respectively, and increased the target stock price by 7.1%." He explained, "Kia's investment points include expanding sales of small and medium-sized electric vehicles through EV3, launching the first model of the purpose-built vehicle (PBV) series, PV5, in the second half of the year, and strengthening shareholder return policies such as share buybacks and cancellations." He added, "It is also an important investment point that Kia generates better profits compared to its peers under the same conditions."

Kia's second-quarter performance this year is expected to exceed market expectations. Researcher Kang said, "Kia's second-quarter operating profit is projected to reach 4.0291 trillion KRW, an 18.4% increase compared to the same period last year, surpassing the consensus (average securities firm forecast) by 10.5%." He analyzed, "The upward revision of Kia's operating profit forecast reflects a better-than-expected model mix and more favorable exchange rates. In the second quarter, Kia's sales mix showed that the proportion of sales of sports utility vehicles (SUVs) and above D-segment vehicles reached 27.0%, exceeding expectations, and the KRW-USD exchange rate in the second quarter was 1,371 KRW, 1.2% higher than expected." He continued, "However, Kia's wholesale sales excluding China in the second quarter were preliminarily estimated at 775,000 units, 0.7% lower than expected, due to weaker-than-expected sales in Europe." KB Securities forecasts Kia's annual operating profit this year to increase by 21.8% year-on-year to 14.1344 trillion KRW, which exceeds the consensus by 7.1%.

However, there is an opinion that the potential for stock price growth is gradually narrowing. Researcher Kang said, "Despite the upward revision of operating profit forecasts, the stock price has risen by 22.3% since the beginning of 2024, leading us to believe that the upside potential is gradually diminishing."