Hyundai Mobis at the Center of Hyundai Family Share Transfers, Foreign Investment Expectations Rise

Top Pick in the Automotive Sector
Up 18% This Year... Outperforming Finished Vehicle Makers
PBR Revaluation Expected on Commercial Act and Gift Tax Amendments

Hyundai Mobis is expected to become the focal point for the shares to be transferred between Chung Mong-koo, Honorary Chairman of Hyundai Motor Group, and Chung Euisun, Chairman of Hyundai Motor Group. The company’s performance has been on an upward trend, and it has been selected as the top pick in the automotive sector, as foreign investment demand may increase in anticipation of structural changes in the domestic stock market.

On June 10, Kiwoom Securities maintained its target price for Hyundai Mobis at 375,000 won and its "Buy" investment rating, citing these factors. The previous day’s closing price was 279,500 won.

As of the previous day’s closing price, Hyundai Mobis shares have risen 18.18% since the beginning of the year. During the same period, Hyundai Motor declined by 6.7% and Kia by 5.36%, meaning Hyundai Mobis has significantly outperformed other domestic finished vehicle manufacturers. On the previous day alone, the stock closed up 10.04%. The positive outlook appears to be driven by expectations that the recently reintroduced Commercial Act amendment, proposed on June 5, will pass the National Assembly plenary session on June 12.

In particular, if the partial amendment to the Inheritance and Gift Tax Act, proposed by the ruling party, passes the plenary session, Hyundai Mobis is expected to benefit the most from a revaluation of its price-to-book ratio (PBR). The amendment stipulates that, for inheritance and gift purposes, the valuation of listed shares will have a lower limit set at 0.8 times the PBR, similar to unlisted shares. This would prevent major shareholders from artificially suppressing the share price to facilitate management succession. Based on first-quarter results, Hyundai Mobis’s PBR stands at 0.54.

Hyundai Motor Group operates under a circular shareholding structure: Hyundai Mobis → Hyundai Motor → Kia → Hyundai Mobis. Among the top ten conglomerates in Korea, it is the only group that has not resolved its circular shareholding loop. The source of the group’s control lies in Hyundai Mobis shares, but Chairman Chung directly owns only about 0.33% of Mobis shares. It is essential not only to inherit Honorary Chairman Chung Mong-koo’s 7.29% stake but also to secure additional shares.

Additionally, foreign capital seeking to invest in potential structural changes in the domestic stock market, such as the Commercial Act amendment, may flow into Hyundai Mobis. The company is expected to be less affected by tariff-related profit and loss shocks compared to other finished vehicle manufacturers. As expectations for stable performance in the second half of the year have grown, the foreign ownership ratio has also steadily increased.

Hyundai Mobis is also expected to be able to respond to China’s rare earth export restrictions. While US and European drive motor suppliers are even considering relocating their final assembly processes to China, Hyundai Mobis is reportedly already in the process of importing permanent magnets for drive motors from China.

Shin Yoonchul, a researcher at Kiwoom Securities, stated, "If the Chinese government gives final approval, Hyundai Mobis will be able to supply drive motors more stably than its competitors. Conversely, as demand for customers’ PE modules has entered a slowdown phase due to a prolonged temporary demand slump both domestically and internationally, the risk of production disruptions at Hyundai Mobis’s domestic electrification plants in the second half of the year due to rare earth supply shortages from China is not expected to be high."