Hanwha Investment & Securities projected on 1st that Kia's profits will decline as the impact of the U.S. tariff policy intensifies. While maintaining a 'buy' rating for Kia, Hanwha Investment & Securities revised its target price down from 140,000 won to 125,000 won, which is 29% higher than the previous closing price of 96,900 won.
Kim Seong-rae, a researcher at Hanwha Investment & Securities, estimated that Kia achieved its highest quarterly revenue to date and a double-digit operating profit margin (operating profit ÷ revenue) in the second quarter of this year (April to June), despite tariff uncertainties.
The issue is that tariffs are likely to significantly impact performance from the third quarter (July to September). The researcher noted, "As the recent U.S. administration under Donald Trump maintains a tough stance on tariff imposition, it is necessary to consider Kia's profit decline due to the 25% tariff reflected in the latter half of this year and in 2026."
Kia attempted to minimize impacts based on the export volume shipped to the U.S. on April 3rd, prior to the imposition of automotive tariffs, and production from its Georgia plant, estimating that only about 10% of its U.S. sales would be affected by tariffs. Beginning in the second half of the year, this means Kia will be under tariff influence except for production from the Georgia plant. Unlike Hyundai, Kia does not have plans to operate the meta-plant America (HMGMA) this year.
The researcher estimated, "Of Kia's U.S. sales target of 860,000 units this year, approximately 31.6% (274,000 units) will incur tariffs, resulting in an estimated expense of about 2.3 trillion won," and added, "For the annual reflection in 2026, a profit decline of about 3.7 trillion won is anticipated."
The researcher assessed that Kia may find upward momentum in its stock price depending on how well it implements its value-up program. He noted, "Kia is expected to enhance its actual shareholder return rate, as it has set a minimum dividend of 5,000 won starting in 2025, alongside plans for a payout ratio of over 25% and repurchasing and retiring 10% of its shares."