Hyundai Motor: Q4 production normalization and new-model benefits expected; target price of 520,000 won

[Financial News] LS Securities expects Hyundai Motor’s earnings to fall short of market expectations in the third quarter due to the effects of strikes, but forecasts a rebound from the fourth quarter, driven by normalized production and higher sales of new models. It maintained its Buy rating and lowered its target price from 650,000 won to 520,000 won.
In a report on the 16th, LS Securities analyst Lee Byung-geun projected Hyundai Motor’s third-quarter revenue at 42.4 trillion won, down 9.4% from a year earlier. Operating profit was estimated at 2.5 trillion won, down 2.8% and 3.6% below market expectations.
Operating profit in the automotive segment was forecast to fall 2% to 1.7 trillion won, while the finance segment was expected to decline 4.5% to 550.1 billion won.
Hyundai Motor’s global wholesale sales in the third quarter totaled 918,000 vehicles, down 11.5% from a year earlier. Excluding China, sales fell 9.6% to 909,000 vehicles. Strikes in July and August caused production disruptions of around 55,000 vehicles. Hybrid vehicle sales growth was also limited to 1%, and the benefits of an improved product mix fell short of expectations.
The analyst forecast that “recovery in production delayed by the strikes and the expansion of new models will gather pace from the fourth quarter, improving revenue and profitability.”
Hyundai Motor began producing its entry-level electric vehicle, the IONIQ 3, in Türkiye last month. European sales are expected to gradually recover on this basis. The analyst also expects expanded hybrid vehicle production in the United States and the staggered rollout of Genesis hybrid models to drive an improvement in the product mix in North America starting next year.
Reflecting the weaker won, LS Securities lowered its operating profit forecasts for Hyundai Motor for this year and next year by 6.7% and 6.8%, respectively. It projected next year’s operating profit at 11.2 trillion won, up 10.2% from this year.
The analyst said, “The stock currently trades at a 12-month forward price-to-earnings ratio of 6.1 times, below the 7.7 times average for traditional automakers,” adding, “Valuation could also rise if the results of its robotics business and its physical AI business become more concrete.”

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