“A conservative approach is also warranted to Hyundai Motor’s earnings outlook for next year” ... Target price cut again

[Financial News] On the 10th, Hanwha Investment & Securities projected that Hyundai Motor’s profits would inevitably decline this year due to production disruptions and rising raw material prices, and that the recovery in earnings next year would also be slow. It maintained its Buy rating but lowered its target price from 600,000 won to 490,000 won.
Kim Seong-rae, an analyst at Hanwha Investment & Securities, said, “We expect annual sales this year to come in at 3.9 million vehicles, well below the guidance of 4.16 million,” adding, “Production disruptions have slowed hybrid vehicle sales and weakened the model mix, while the appreciation of the won has also reduced the positive effect of exchange rates.”
Consolidated revenue this year is estimated at 186.264 trillion won, similar to last year, while operating profit is expected to fall 15.4% to 9.704 trillion won. The operating margin is forecast to decline from 6.2% last year to 5.2% this year. Revenue from the automotive division is expected to fall 4.8% to 138.656 trillion won.
Revenue growth is expected to recover next year as sales of new models delayed by production disruptions in the second half of this year are reflected. Revenue next year is forecast to rise 4.9% from this year to 195.441 trillion won, while operating profit is expected to increase 4.8% to 10.172 trillion won. The operating margin is estimated at 5.2%, unchanged from this year.
In North America, the fully redesigned Hyundai Elantra and Hyundai Tucson, along with GENESIS hybrid models, are expected to address demand in the United States and help improve profitability. In Europe, Hyundai is expected to meet demand for affordable electric vehicles by expanding production of the IONIQ 3 at its Türkiye plant, and to focus on regaining market share amid the push from Chinese automakers.
Analyst Kim noted, “Given negative macroeconomic factors, including the impact of this year’s rise in raw material prices and the downward trend in the won-dollar exchange rate, a conservative approach is needed to next year’s revenue growth and pace of profit improvement,” adding, “In Europe, intensifying competition will weaken profitability, so increased volume is likely to contribute less to profits.”
Competitiveness in future mobility was also cited as a key variable. As global automakers compete to launch Level 2-plus software-defined vehicles (SDVs) in 2028, the assessment is that it is time to see whether Hyundai Motor’s development vehicle, the “pace car,” proves competitive and whether its SDV technology framework—including its electrical and electronic architecture—takes concrete shape.
[email protected] Joo Won-gyu Reporter