[Click eStock] "Hyundai Motor, Tariff Uncertainty... Target Price Down"

On the 15th, LS Securities downgraded the target price for Hyundai Motor from 360,000 KRW to 300,000 KRW, stating that "the valuation decline of global original equipment manufacturers (OEMs) due to tariff concerns has been taken into account." The buy rating was maintained.

On the same day, Lee Byung-geun, a researcher at LS Securities, said, "There is both high profit and tariff uncertainty," explaining the decision.

Hyundai Motor's expected first-quarter performance is projected to be sales of 42.594 trillion KRW (a 4.8% increase year-on-year), operating profit of 3.602 trillion KRW (a 1.3% increase), and an operating margin of 8.5%, which aligns with the market consensus. The researcher forecasted, "Operating profit by segment is expected to be 2.852 trillion KRW for automobiles (a 1.1% decrease) and 537 billion KRW for finance (a 26.3% increase)," adding, "The change in sales composition driven by a 0.9% increase in U.S. sales and a 29.3% increase in hybrid sales is supporting profits."

If the 25% tariff is maintained, an annual negative impact of up to 7 to 8 trillion KRW is expected; however, gradually increasing production at Hyundai Motor Group's U.S. manufacturing subsidiary (HMGMA) is expected to reduce this to 4 trillion KRW. The researcher added, "Before the expansion of HMGMA production, some offsetting is possible through reduced dealer incentives and exchange rate effects," and predicted, "As HMGMA's operating rate gradually rises, the negative impact from tariffs will gradually diminish."

Additionally, the researcher noted, "The current stock price is trading at 3.8 times the 12-month forward price-to-earnings ratio and 0.5 times the price-to-book ratio (PBR)," adding, "Even considering tariffs, the valuation remains attractive. It is a good time to expect a stock price rebound due to tariff adjustments."