Hyundai Motor(005380) is down more than 6% early in the session after it released second-quarter results that fell short of market expectations.
At 9:35 a.m. on the 24th, Hyundai Motor was trading at 403,250 won on the main board, down 28,750 won (6.66%) from the previous session.
Hyundai Motor said its second-quarter operating profit on a consolidation basis was 2.851 trillion won, down 20.8% from a year earlier. Revenue rose 49.2153 trillion won, up 1.9%, but the operating margin was 5.8%, below the annual guidance (6.3–7.3%). Wholesale sales were 992,000 units, down 6.9% year over year.
The securities industry noted that profitability fell short of expectations despite topline growth. Car sales declined due to an engine valve parts supply issue and restrictions on exports to the Middle East, and the product mix deteriorated amid production disruptions of high-margin models. In Europe, intensified competition with Chinese electric vehicle makers expanded sales incentives, hurting profitability.
Kim Yong-min, an analyst at Yuanta Securities Korea, cut the target price to 570,000 won from 690,000 won. It is the lowest target among the 17 brokerage houses that issued reports that day and the only one in the 500,000-won range. However, citing increased upside potential after the share-price correction, the investment rating was raised to "buy (BUY)."
Kim said, "It is difficult to justify the valuation premium that had risen on Robotics expectations," lowering the automobile division's target price-to-earnings ratio (PER) to 10 times from 15. However, profitability is expected to recover with normalized production in the third quarter and new-model effects in the fourth quarter.
By contrast, analyst Haneul at NH Investment & Securities lowered the target price to 760,000 won from 860,000 won while maintaining a "buy" rating. The target price was adjusted by lowering expectations for the timing of humanoid mass production, but from the second half, normalized production and launches of new models such as the Ioniq 3 are expected to enable an earnings turnaround. At the CEO Investor Day (CID) scheduled for next month, strategies for new businesses such as Autonomous Driving and humanoids are expected to be unveiled.
Meanwhile, the Hyundai Motor labor union decided to hold an additional partial strike for three days from the 29th to the 31st. The industry notes that if wage talks drag on, production disruptions in the second half could widen.