Hanwha Securities evaluated that Kia's 2025 guidance, presented by the company, is based on a conservative assumption regarding the won-to-dollar exchange rate, and concluded that the company could achieve higher operating profits.
According to Hanwha Securities, Kia has set sales and operating profit targets of 112.5 trillion won and 12.4 trillion won, respectively, for this year. Compared to last year's performance, sales are expected to rise by 5%, but operating profits are projected to be about 2% lower. Kia also forecasts an operating profit margin of 11%, which is 0.8 percentage points lower than last year.
Song Seon-jae, a researcher at Hanwha Securities, noted that Kia presented its guidance based on an increase in incentives, which are subsidies paid by manufacturers to dealers, and a decline in exchange rates, but he considers the targets to be conservative. Kia set the won-to-dollar exchange rate at 1320 won, which is lower than last year’s average (1364 won) and this January's average (1432 won).
Hanwha Securities expects the average won-to-dollar exchange rate to be 1395 won this year. Based on this, Kia's guidance can be reconsidered, revealing potential annual operating profits of 12.7 trillion won and an operating profit margin of 11.3%. Song asserted, "While the automotive industry's low growth and the uncertainties of policies in various countries are disappointing, I believe that under the assumptions of Hanwha Securities' won-to-dollar exchange rate, the company will achieve higher operating profits than the guidance suggests."
Song further noted that last year, Kia's eco-friendly car sales reached 638,000 units, and the plan to increase this number by an additional 250,000 units this year is expected to support the rise in average selling price (ASP).
Song also mentioned, "Kia is showing a low valuation, with a price-to-earnings ratio (PER) in the early 4s, along with an annual dividend yield of 6.4% and plans for a share buyback and cancellation worth 700 billion won, which are positive aspects for shareholders."