“Sales are up, but the exchange rate is a drag” ... Kia price target cut

[Financial News] On the 12th, Eugene Investment & Securities lowered its price target for Kia Corporation to 160,000 won from 220,000 won, while maintaining its “Buy” rating in light of the impact of exchange rates.
Eugene Investment & Securities forecast that Kia Corporation’s third-quarter revenue would be 32.3 trillion won, operating profit 2.5 trillion won and profit attributable to controlling interests 2 trillion won, all below consensus estimates.
Researcher Lee Jae-il of Eugene Investment & Securities said, “Kia’s wholesale sales in the third quarter are expected to reach 828,000 units, up 7.8% from a year earlier,” adding, “Wholesale sales are expected to increase in all global regions except China and other markets.”
The analyst said Kia had particularly differentiated itself from Hyundai Motor Company in the South Korean and European markets, and that the launch of low-priced electric vehicle (EV) models had driven sales growth.
He also explained, “In the U.S. market, expanded production capacity for the Kia Telluride hybrid electric vehicle (HEV) and local production of the Sportage HEV significantly improved both the sales mix and volume,” adding, “In India, sales growth continued to outpace the market, buoyed by the launch of the new Kia Seltos and Kia Carens.”
However, the analyst said earnings were expected to fall short of expectations due to exchange rates and price competition. Lee noted, “The decline in the won-dollar exchange rate weakened export profitability, while the growing market share of Chinese-made EVs intensified price competition,” adding, “The losses from increased EV sales outweighed the improvement in the hybrid mix.”
He added, “The sharp decline in the won-dollar exchange rate continues to raise concerns about profitability,” and, “The aggressive push to sell Chinese-made eco-friendly vehicles is also a concern. As their penetration in Southeast Asian and emerging markets rises, they could become direct competitors.”

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