After a couple of tough years in international markets, Hyundai Motor Group has finally gotten a break.
Hyundai Motor stock jumped to 167,000 won per share on Oct. 2 from 148,000 won per share on Sept. 1, boosted by the Volkswagen fiasco. Shares of the group’s affiliates, meanwhile, are also on the rise. Kia Motors jumped 10.3 percent during the same one-month period. Shares of Hyundai Mobis rose 13.6 percent and Hyundai Wia was up 25.8 percent and Hyundai Glovis rose 29.4 percent.
Volkswagen’s dilemma over its false fuel efficiency ratings gave a boost to the Korean carmaker, as did the popularity of its new car models and the exchange rate of the Korean currency. The reform of the company’s management system also helped, as did the purchase of its own shares at the market, all of which are considered to be among the advantages for the motor group and its affiliates.
The group’s excellent third quarter projected record also helped with some 24 securities firms forecasting Hyundai Motor to record 1.577 trillion won in operating profit, up 1.87 percent from the preceding quarter. Its sister car maker Kia Motors was also projected to post 593.1 billion won in operating profit in Q3, up 2.19 percent from the previous quarter.
Securities market sources said the past few years haven’t been kind to the companies, and now they are benefitting from some much-needed good news. The price of Hyundai Motor’s shares nosedived to as low as 123,000 in July. The car maker had to recall sizeable numbers of its cars, but its shares have since rebounded.
The maker of car parts, whose exports to China have been stalled by the Chinese authorities to regulate auto sales in China, saw their share prices rebound after China eased regulations on the sales of passenger cars with 1,600 cc engines by cutting sales taxes on them from Oct. 1 until the end of next year. The shares of Hyundai Mobis and Hyundai Wia rose sharply since the announcement. Shares of the two car parts makers had been moving sideways, despite the introduction of new car models and the rise in the exchange rate of the Korean currency against the U.S. dollar.
Hyundai Mobis underwent a share buyback equaling 1 percent of its outstanding shares on Sept. 23, which the stock market viewed as a move to make changes in the ownership of the company. Among the Hyundai Group affiliates, Kia Motors has been drawing the most attention among industry experts, as the auto maker produces the largest portion of its cars at home and thus is sensitive to exchange rate fluctuations. Sales of the Sorrento and Sportage have been doing very well at home and abroad.
An stock market analyst predicted that Kia Motors would get the most benefits out of the rise in the exchange rate of the Korean won early next year as it is projected to be set around 1,180 won to 1,250 won per U.S. dollar. Hyundai Motor, too, has been doing very well in the U.S. car market so far this year and would continue to keep the same pace next year, too. Last month, the two auto makers said their sales rose 17.8 percent on-year higher than the sales in the U.S., which is up 15.7 percent on-year.
Hyundai Mobis and Hyundai Wia shares may go through a readjustment with their Q3 earnings, as the two companies’ earnings may have been hit by falls in the sales of cars for both Hyundai Motor and Kia Motors in July and August because of slackened demand in China.
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A bird’s eye view of the twin buildings that the group plans to build at the old KEPCO site, one of the priciest land, in southern Seoul.
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