[Click e-Stock] "HMG Global Target Market Cap at 296 Trillion Won... Preferred Shares Recommended if Common Shares Are Burdensome"

On January 22, Daishin Securities maintained its Overweight investment rating on the three HMG Global companies under Hyundai Motor Group (Hyundai Motor, Kia, and Hyundai Mobis), while raising their target market capitalization to 296 trillion won. The breakdown is 151 trillion won for Hyundai Motor, 90 trillion won for Kia, and 54 trillion won for Hyundai Mobis.

On this day, Kim Guiyeon, a researcher at Daishin Securities, stated, "If the momentum of Software-Defined Vehicles (SDV) becomes visible as expected, HMG's next target market capitalization is projected at 370 trillion won." Kim added, "Ongoing robotics expectations related to the US robotics company Boston Dynamics and the acceleration of SDV and autonomous driving strategies mean there is further potential for upward adjustment."

Kim first emphasized the trend of sector-wide revaluation. He analyzed, "The recent stock price increase is driven more by a reappraisal of growth momentum than by upward revisions to earnings estimates," and noted, "As of the previous day, the 12-month forward price-to-earnings ratio (PER) for the automobile sector stood at 8.0 times, and the price discount rate compared to the KOSPI had narrowed to 23%."

While maintaining an Overweight recommendation on the automobile sector, Daishin Securities also raised target prices for related stocks as follows: Hyundai Motor to 660,000 won, Kia to 230,000 won, Hyundai Mobis to 600,000 won, HL Mando to 93,000 won, and SL to 85,000 won.

However, Kim pointed to short-term volatility as a risk factor. He cited the potential for increased foreign selling and a possible reduction in valuation attractiveness compared to global peer groups as reasons.

In this context, Kim suggested preferred shares as a safer investment option. He explained, "While there is still upside potential for Hyundai Motor common shares, if concerns about short-term price increases are significant, preferred shares can serve as a safe haven. As of the previous day's closing price, Hyundai Motor 2 Preferred Shares (Hyundai Motor 2U B) traded at 290,000 won, representing a 42% discount compared to the 550,000 won price of Hyundai Motor common shares."

He added, "On January 29, Hyundai Motor will announce its fourth-quarter results for last year, along with its shareholder return policy. In addition to valuation momentum, interest in core business performance and shareholder returns is expected to increase."