Kiwoom Securities said on Oct. 20 that if the U.S.-bound tariff is cut to 15% within the year for Hyundai Motor, it would dispel concerns about negative growth and the firm would designate it as a top pick. Accordingly, it raised its target price to 285,000 won from 260,000 won and maintained its "buy" rating.
Hyundai Motor's third-quarter revenue is expected to be 44.8 trillion won and operating profit 2.32 trillion won. Revenue is projected to grow 4.4% from a year earlier, but operating profit is expected to fall 35.2%. With the tariff expense structure persisting in the third quarter following the second quarter, both revenue and operating profit are likely to fall short of market expectations (consensus).
Global sales volume is expected to show some growth from a year earlier, totaling 1,044,000 units, with 257,000 in the United States, 150,000 in Europe, and 146,000 in India. Domestic sales were 181,000 units, led by SUVs such as Santa Fe and Palisade.
Although the third-quarter report card is expected to be somewhat below consensus, if the U.S.-bound tariff is lowered to 15% from the current 25%, results are expected to improve quickly.
Recently, the heads of Korea's five major conglomerates, including Hyundai Motor, reportedly held a private golf meeting with U.S. President Donald Trump. The meeting is believed to have included discussions on trade issues, including tariffs. As a result, ahead of the South Korea-U.S. summit to be held on the margins of the Asia-Pacific Economic Cooperation (APEC) meeting, expectations are rising for a cut in auto tariffs as tariff negotiations wrap up.
Shin Yun-cheol of Kiwoom Securities said, "At this point, among KOSPI constituents within the top 10 by market capitalization, the only stocks expected to show negative growth are Hyundai Motor and Kia," adding, "Even as the KOSPI index broke through the 3,700 level, it was an environment where the negative growth caused by tariffs on U.S.-bound auto items inevitably stood out."
He added, "A shift is possible away from negative growth to at least maintaining this year's level with a reduction in item-specific tariff rates alone."