Hyundai Motor Group units to reach $76 billion market value on earnings

[Courtesy of Hyundai Motor Group]

Three units under South Korea’s largest automotive giant Hyundai Motor Group are poised to reach market value worth 100 trillion won ($76.98 billion), which hit the highest in early 2021, on improved earnings outlook.

According to the Korea Exchange on Tuesday, the aggregated market value of Hyundai Motor Co., Kia Corp. and auto parts maker Hyundai Mobis Co. stood at 99.9 trillion won, up 22.81 percent from the beginning of this year. Their combined value was the highest in February 2021, reaching 127.9 trillion won, but began to fall as the supply disruptions in automotive semiconductors during the years of the pandemic dragged down their earnings.

However, market value started its recovery with improved earnings, mostly in the U.S. and Europe. Shares of Hyundai Motor and Kia this year rose 36.42 percent and 45.36 percent, respectively, compared with the end of last year. The price of Hyundai Mobis climbed 14.71 percent during the period.

The rise in share price was driven by positive expectations about future earnings. Hyundai Motor and Kia posted an earnings surprise in the first quarter, with an aggregated operating profit of 6.46 trillion won, on the back of surging sales in the U.S. and Europe. The two Korean automakers sold record 380,000 units in the U.S. during the quarter.

Their operating profit also surged. Hyundai Motor’s first-quarter operating profit rose 86.3 percent on year to a record 3.59 trillion won. Sales and operating profit of Hyundai Mobis were also up 29.7 percent and 8.1 percent on year to 14.66 trillion and 418.1 billion won, respectively.

For the three units, the upward trend in earnings is expected to continue into the second half of this year. Hyundai Motor and Kia said their global sales in May totaled 613,000 units, up 9.4 percent on year and 1.3 percent on month.

According to financial data tracker FnGuide Inc., Hyundai Motor’s annual sales is projected to go up by 9.27 percent to 155.7 trillion won. Its operating profit will likely surge by 34.03 percent to 13.16 trillion won. Kia expected its sales and operating profit to reach 98.16 trillion won and 10.8 trillion won, up 13.4 percent and 49.32 percent compared with the same period a year ago.

“Earnings increase in the second quarter from the first quarter, as the former period is considered a busy season, and we expect the second quarter to fully incorporate the impact of the declining commodity prices that commenced at the end of last year,” said Im Eun-yeong, a market analyst at Samsung Securities Co. “The sales proportion of high-value sports utility vehicles rose to 60 percent, leading to a substantial enhancement in profitability.”

Hyundai Mobis will likely see higher profitability in the second quarter as logistic costs, which surged during the pandemic, returned to normal levels, enabling the auto parts maker to save up to 600 billion won in logistics. FnGuide found that Hyundai Mobis’ sales and operating profit are also expected to increase by 15.71 percent and 21.50 percent year-on-year to 60.626 trillion and 2.46 trillion won, respectively.

The three automotive companies posted higher operating margins in the first quarter compared with their records in 2021. Hyundai Motor and Kia had operating margins of 10.5 percent to get ahead of their global rivals, such as General Motors Co. with 9.5 percent and Ford Motor Co. with 8.2 percent.