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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. 


Some Informations

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)

2018/10/25

"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.  

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References

Hyundai Motors IR pages. 

(22) 2021/02/26 https://ca.finance.yahoo.com/news/analysis-hyundai-bought-chips-rivals-050255364.html?.tsrc=rss

(21) 2020/10/02 https://financialpost.com/pmn/business-pmn/hyundais-u-s-sales-rise-5-in-september

(20) 2020/07/23  https://finance.yahoo.com/news/hyundai-motor-second-quarter-profit-052739425.html?.tsrc=rss

(19) 2020/06/01 https://seekingalpha.com/news/3578880-hyundai-motor-sales-dropped-39-in-may

(18) 2020/05/06 https://finance.yahoo.com/news/hyundai-motor-sales-down-57-081333041.html?.tsrc=rss

(17) 2020/01/22 https://www.hyundai.com/content/hyundai/ww/data/ir/calendar/2020/0000000273/files/hmc-q4-2019-and-annual-business-results.pdf

(16) 2019/01/02 http://marketbeat.com/URL/?URL=https://business.financialpost.com/pmn/business-pmn/hyundai-kia-report-2019-global-sales-of-7-2-mln-vehicles-miss-target

(15) 2019/12/05 https://seekingalpha.com/news/3523742-hyundai-to-invest-heavily-in-next-gen-auto

(14) 2019/10/14 https://finance.yahoo.com/news/hyundai-kia-earmark-760-million-092253890.html?.tsrc=rss

(13) 2019/08/02 http://marketbeat.com/URL/?URL=http://www.businesskorea.co.kr/news/articleView.html?idxno=34410

(12) 2019/07/25 https://www.finanzen.net/nachricht/aktien/hyundai-motor-praesentierte-bilanzzahlen-zum-juengsten-jahresviertel-7754224

(11) 2019/06/20 https://www.finanzen.net/nachricht/aktien/ruecklaeufiges-geschaeft-ey-studie-autoindustrie-rutscht-tiefer-in-die-krise-7629337

(10) 2019/06/07 https://www.autonews.com/regulation-safety/us-appeals-court-upholds-210-million-hyundai-kia-gas-mileage-settlement

(9) 2019/04/24 https://www.hyundai.com/content/hyundai/ww/data/ir/calendar/2019/0000000234/files/19-04-24-hmc-q1-2019-business-results-pt.pdf

(8) 2019/01/24 https://www.finanzen.net/nachricht/nachricht-7058673

(7) 2019/01/02 https://www.finanzen.net/nachricht/nachricht-6983005

(6) https://www.finanzen.net/nachricht/nachricht-6943468

(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

1. http://english.yonhapnews.co.kr/business/2018/09/30/0501000000AEN20180930003600320.html

2. https://www.reuters.com/article/us-kepco-realestate-hyundai-motor/hyundai-motors-record-10-billion-bid-for-trophy-property-alarms-investors-idUSKBN0HD06U20140918

 

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