[Click eStock] "Hyundai Motor, Tariff Shock Expected from Q2... Target Price Down"

Target Price Lowered from 290,000 KRW to 270,000 KRW

Shinhan Investment Corp. on the 11th lowered the target price for Hyundai Motor Company from 290,000 KRW to 270,000 KRW, anticipating that tariff impacts will gradually appear starting from the second quarter of this year. The investment rating was maintained at 'Buy.'

Park Kwang-rae, a researcher at Shinhan Investment Corp., stated, "The target price was lowered to reflect changes in earnings estimates," adding, "For now, we expect downside support for the stock price from a dividend yield in the 7% range and share buybacks and cancellations scheduled for the first half of the year, but stock price fluctuations will be inevitable until tariff uncertainties are resolved."

Hyundai Motor's first-quarter earnings this year are expected to meet market forecasts. Researcher Park said, "First-quarter earnings are expected to align with market expectations, with sales increasing 7.6% year-on-year to 43.8 trillion KRW and operating profit decreasing 4.0% to 3.4 trillion KRW," and added, "Although global sales in the first quarter slightly declined year-on-year, sales growth is possible due to increased hybrid vehicle sales and the effect of exchange rate appreciation, which significantly raised the average selling price."

The transaction prices for new Hyundai and Genesis vehicles in the U.S. are approximately $37,000 and $65,000 respectively, and the quantities exported from Korean factories to the U.S. last year were 556,000 units for Hyundai and 52,000 units for Genesis. Researcher Park analyzed, "Arithmetically, tariff costs could reach up to 8.8 trillion KRW annually," and added, "With the start of operations at the metaplant factory, adjustments in production mix between Korean and U.S. factories, inventory utilization, incentive reductions, and the added effect of exchange rates, the actual costs are expected to be lower than estimated, around 2 to 3 trillion KRW."

Shinhan Investment Corp. projected Hyundai Motor's performance this year to be sales of 181 trillion KRW, a 3.1% increase year-on-year, and operating profit of 13.5 trillion KRW, a 5.4% decrease.