SEOUL, KOREA – Strong rebounds to continue with record sales
Hyundai Motor (Hyundai) and Kia Motors’ (Kia) record-breaking sales rally continued in Nov for a second straight month and will continue in Dec due to expanding production capacity and strengthening lineups amid the record-low global inventories. As for the fuel economy issue, the anticipated solid Nov US sales numbers will dispel the concern. As such, given the expected record volume sales in 4Q12 and the limited negative impact from the fuel economy concerns, the recent rebound would be sustainable, in our view. It is also positive that Kia’s pro cee’d and K5 applications were awarded at the 2012 iF Design on Nov 30.
As a result, Kia, since 2009, has swept 15 prizes (including three applications) at three prestigious international design awards.
Both Hyundai and Kia set record sales in Nov Hyundai set monthly record sales for a second straight month in Nov and Kia revisited its alltime high last seen in Nov 2011. Hyundai’s Nov sales grew 11.9% YoY to 420,365. Domestic sales grew 12.6% YoY to 61,608. Overseas sales grew 11.8% YoY on record overseas plant sales (exports 117,668 (+0.3% YoY), overseas plants 241,089 (+18.5% YoY)). Kia’s sales grew 6.4% YoY to 258,157 on its second-highest overseas plant sales of 109,607 (+15.6% YoY). Exports fell 4.3% YoY to 104,150 while the scheduled expiry of domestic luxury-item tax breaks at end-2012 turned Kia’s domestic sales to positive growth of 13.8% YoY to 44,400.
Valuation
We maintain BUY on both counters with TP W320,000 for Hyundai (10x 12MF PE, 10%
premium to past average) and TP W105,000 for Kia (10x 12MF PE, sector average).
*Source: Korea Investment & Securities Co.*
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*Article provided by The Korea Economic Daily
