Hyundai Motor, Kia shares up as earnings expectations grow

[Photo by Lee Chung-woo]

Shares of Hyundai Motor Co. and Kia Corp. saw their shares surge in tandem on Monday, as expectations for earnings, value enhancement, and new businesses grow, igniting a rebound in stock prices.

On Monday, shares of the two top automakers in South Korea under Hyundai Motor Group soared 3.10 percent and 3.33 percent respectively from the previous trading day, with their gains even exceeding 5 percent at the beginning of the session.

Hyundai Motor and Kia shares had fallen more than 10 percent from their highs as demand was heavily focused on semiconductors, but they began to rebound in April 2024 as positive earnings forecasts emerged due to exchange rate effects.

Most market expectations were for both automakers to see a decrease in operating profit due to their sluggish sales. But going into April there are expectations that they could see a slight increase in profits from 2023.

Kia in particular is forecasted to achieve an operating profit margin of 11 percent in the first quarter of 2024, which would be its sixth consecutive quarter of double-digit operating margins. Kia’s management also expressed confidence at the company’s Investor Day event during the previous week that the company could meet its targets despite the unfavorable market conditions.

“Hyundai Motor plans to announce measures to enhance shareholder value at its Investor Day event in June 2024, and if the company’s earnings results are good, the amount of shareholder return will increase,” Meritz Securities Co. analyst Lee Joon-seong said.

Foreigner investors bought the most shares in Hyundai Motor, worth 75.6 billion won ($55.88 million), after those of Samsung Electronics Co., worth 199.8 billion won, on the day and their net purchases of Kia shares amounted to 14 billion won.

Another positive sign is that the Korean government’s intention to pursue a long-term value-up program is becoming more prominent as the general elections on April 10th approaches and Hyundai Motor Group‘s new businesses are taking concrete shape.

Hyundai Motor Group announced earlier that it will convert all vehicle models into software-defined vehicles (SDVs) in 2024 as part of a strategy to gain competitiveness over Tesla Inc., the pioneer in this field.

The auto giant is also focusing on speeding up the commercialization of robotics and urban air traffic (UAM), which it is promoting as major new businesses.