Samsung Securities said on the 27th that starting with this year's share buybacks, Hyundai Motor is expected to increase the proportion of preferred stock purchases to narrow the gap between common and preferred shares. It maintained a Buy rating and a target price of 285,000 won. Hyundai Motor's previous trading day share price was 252,500 won.
As the South Korea-U.S. summit is set for the 29th, expectations are rising for South Korea-U.S. tariff negotiations. With growing expectations for a deal on tariffs with the United States, the auto sector, led by finished carmakers, is also showing a recovery in share prices. Samsung Securities analyzed that if the tariff is lowered to 15% from 25%, most companies' tariff expense would decrease by 40% to 50%.
Researcher Lim Eun-young at Samsung Securities said, "Following the conclusion of the tariff negotiations, expectations for Hyundai Motor's share buybacks and the government's separate taxation on dividends are driving preferred shares first."
Samsung Securities analyzed that Hyundai Motor's preferred shares have outperformed common shares, with 4% remaining to reach a record high. This is due to the combined impact of expanding the share of buybacks and expectations for the government's separate taxation on dividends.
After the South Korea-U.S. tariff negotiations end, Hyundai Motor is expected to have the potential for share buybacks and cancellations.
Lim said, "Hyundai Motor announced a 4 trillion won share buyback plan for results from 2024 this year through 2027," adding, "If tariff uncertainty is resolved, there is a possibility that this year's buybacks will start from year-end."
She added, "Starting with this share buyback, the plan is to increase the proportion of preferred stock purchases to narrow the gap between common and preferred shares."
She explained that until now the company had bought back shares in proportion to market capitalization. The current gap between Hyundai Motor's preferred and common shares is 25%, leaving more upside potential for preferred shares.
She also assessed that Hyundai Motor and Kia are attractive as dividend stocks. Lim said, "Despite weak results this year due to tariffs, dividends are expected to be maintained at the same level as last year," adding, "If the plan for separate taxation of dividend income is implemented, dividend funds may concentrate on Hyundai Motor and Kia."