Hyundai Motors Corporation last update Jan 26th, 2020
This is not a recommendation or proposal to do anything. The data written in this article is not guarranteed. It is my private personal opinion. I`m not independing as I own a position of HMC shares.
Hyundai - Kia is one of the biggest car manufacturers in the world with 7 million vehicles. Hyundai Motors is a big part of it with 3.75 mio sold cars in 2020, revenues of 94 bn$ The companies valuation is 61 bn$(Jan, 26th, 2021)
Risk & Chances
Potential motivation to buy Hyundai Motors stock: Hyundai managed to improve its profitability by an improved product mix with a higher SUV share. It is expected that revenues and profits will rise strongly when governments and poeple calm down from their corona panic in spring 21.
The Hyundai Motor achievements are not bad taken the global corona panic in account.
The company plans to allocate 30 to 50% of annual Free Cash Flow for shareholder returns.
Not all decisions of Hyundai Motors follow the business logic. Ex. the company paid in 2014 10bn$ for a real estate in Seoul (2). I do not know the background. Potentially it could be a political background.
Some Data & Information
Share Price: Jan, 26 th, 252.000 KRW about 230$
2020 Q4/20 Q3/20 Q2/20 Q1/20 2019 Q4/19 Q3/19
Exchange rate KRW/USD: 1103 1103 1128 1196
Car Sales/mio 3.75 1.14 1 0.7 0.9 4.425 1.2 1.1
Revenues/bn$: 94.3 26.5 24.4 18.3 20.5 90.7 23.9 23
Operating Profit/bn$: 2.52 1.49 -.278 .493 0.701 3.16 1.07 0.320
Net Profit/mio. $: 1920 1380 -167 315 448 2800 730 392
EPS $: 7.13 5.12 -0.62 1.17 1.67 10.4
Die Zahlen wurden jeweils unmittelbar in USD umgerechnet. Deshalb können sich Inkonsistenzen ergeben.
2021/02/26 Hyundai bought chips when rivals didn't; its assembly lines are still rolling. They are less affected by the chip crises than most of its competitors.
Interim dividends: Hyundai Motors suspended its interim dividends 2020 due to the uncertainty caused by the Covid-19 panic (20).
2020/01/02 Hyundai Motor Co and affiliate Kia Motors said on Thursday their combined 2019 global sales were 7.19 million vehicles, short of their target of 7.6 million vehicles. The South Korean duo announced a combined 2020 sales target of 7.54 million vehicles before Covid-19 panic. (16)
2019/12/05 Hyundai Motor plans to allocate about a third of its $51.2B investment budget into developing next-gen automobiles over the next six years, according to Nikkei Asian Review. Hyundai has a goal of selling 560K electric cars and 110K fuel-cell vehicles cumulatively by 2025. The new portfolio will kick off in 2021 when an electric version of the Genesis luxury car debuts. With an eye toward profitability, Hyundai expects to boost sales of highly profitable sport utility vehicles and raise its operating profit margin to 7% in 2022 and 8% in 2025. (15)
2019/10/14 Hyundai Motor Co and Kia Motors Corp earmarked a total of 760 mio. $ to settle U.S. class action litigation and address engine-related issues in the United States and South Korea (14)
2019/08/02 Hyundai Motor Co. is transforming its Chongqing Plant 5 in China into an electric vehicle (EV) plant in a bid to reinvigorate its slumping Chinese business. Last year, Chongqing Factory, which can produce 300,000 units a year, sold only 70,434 units in total. (13)
2019/06/07 A federal appeals court restored a $210 million nationwide class-action settlement for hundreds of thousands of owners of Hyundai Motor Co. and Kia Motors Corp. vehicles whose fuel economy estimates were inflated (10).
2019/01/02 Hyundai Motors forcasts a further increase of saled cars in 2019.
2018/12/17 Actually a class action law suit is prepared against Hyundai Motors on fire accidents with some of its cars (6)
"Because of temporary cost factors such as expansion of World Cup marketing activities, recall of airbag controllers, and application of new engine diagnostics technology called 'KSDS' in the U.S., operating expenses increased and operating profit decreased," the company explained.(3) This is not really the information I like to read. New engine diagnostic systems and sport marketing events are things that occur regularly.
Number of outstanding stocks: Common stock 206,617,212; 1 st Preferred stock 22,859,122; 2 nd Preferred stock 36,164,489 3 rd Preferred stock 2,448,637 Total 268 mio. shares
Treasury stocks: Common stock 15,359,818 1 st preferred stock 2,445,984 2 nd preferred stock 1,740,855 3 rd preferred stock 48,817
The Global Automobile Market (Thousand units)
Q1 2018 Q1 2019 Q3/19 Q4/19 2019 Q2/20 Q3/20 Q4/20 2020
Korea 427 414 420 480 1740 540 460 490 1850
US 4,111 4,007 4330 4300 17601 2940 3910 4190 14575
Europe 4,289 4,146 3690 3690 15806 2050 3470 3390 11961
China 5,674 5,080 4970 6020 20804 4830 5380 6490 19436
India 853 837 620 790 2954 150 730 900 2440
Global 24,09 22,47 21,11 22.3 86.7 14,36 19,92 22.1 72.6
The global automobile demand shrank since Q1/2019 and imploded in q2/20. In Europe the market is still depressed while it seems to recover in Asia strongly.
ROK Location for Automobile Manufacturing
GM put the business location ROK shortly ago in question. High costs an aggressive labor union created a loss of 1.5 bn$ in the last 3 years. Actually there was a strike at Hyundai as the management planned to establish a new plant with lower wages (5). It seems that automobile manufacturing in the ROK faces similar challenges as that of other saturated industrial countries. The German car manufacturers faced similar challenges in the last decades of the last centuries. They outsourced non core activities, established lean structures with plenty of lower paid contractors and lease workers, aggessive purchasing put more volume to lower cost countries. I hope the Hyundai management already smells the napalm.
Business Location ROK
the ROK was one of the poorest countries of the world after the war in 1953. With very hard work and discipline they managed to become a developed country with a similar standard of living as South European countries. For ex. the Samsung Electronics memory chip division passed its international competitors by working 6 - 7 days a week achieving a 1/2 year advantage vs. international competition at the turn of the millenium. One specific point in the ROK were always the very aggressive labor disputes. Now it seems as the ROK is very saturated like other established industrial nations. The left government elected 2017 seem to do destructive politics in favor of unions, gender, climate hoax, against nuclear power. The economic growth decreased to the lowest level since 9 yrs. (Q3/18). I hope that the government or at least the potential voters smell the napalm.
Hyundai Motors IR pages.
(21) 2020/10/02 https://financialpost.com/pmn/business-pmn/hyundais-u-s-sales-rise-5-in-september
(8) 2019/01/24 https://www.finanzen.net/nachricht/nachricht-7058673
(7) 2019/01/02 https://www.finanzen.net/nachricht/nachricht-6983005
(5) 2018/12/06 https://www.finanzen.net/nachricht/aktien/hyundai-beschaeftigte-protestieren-gegen-plaene-fuer-niedriglohn-fabrik-6910914
4. 2018/10 https://eu.detroitnews.com/story/business/autos/general-motors/2018/04/12/general-motors-south-korea/33770137/
3. 2018/10 http://www.businesskorea.co.kr/news/articleView.html?idxno=26014