Kia Corp.’s market capitalization has outstripped Hyundai Motor’s. The automaker’s record-breaking earnings and strong shareholder return policy paid off handsomely, stock market experts say. Some of them believe that there is a remaining upside as the price-to-earnings ratio (PBR) is still below 1x.
As of Jan. 31, Kia’s market capitalization stood at 41.3703 trillion won (US$31.0623 billion), surpassing Hyundai Motor’s 41.1640 trillion won by 206.3 billion won. At the beginning of last year, Kia’s market capitalization was 24.9298 trillion won, about 8.6 trillion won less than Hyundai’s 33.5459 trillion won, but it has managed to overcome the gap in just over a year. Kia jumped to the sixth spot in the market capitalization rankings on the KOSPI market while Hyundai slid to seventh place.
Kia’s stock price surged before and after its earnings call on Jan. 25. In 2023, Kia’s consolidated sales rose 15.3 percent year on year to 99.8084 trillion won. Its operating profit climbed 60.5 percent to 11.6079 trillion won. Both its sales and operating profit hit record highs. Its stock price jumped 17.06 percent in the last five trading days, including the day of the earnings announcement.
An enhanced shareholder return policy has also helped boost Kia’s stock price. Kia declared a final dividend of 5,600 won, up 2,100 won from the previous year. As of the announcement date, the dividend rate was 6 percent. The company also announced a plan to acquire 500 billion won worth of treasury shares this year, with 50 percent of them to be canceled in the first half of this year. The remaining 50 percent will be canceled depending on business performances.
Meanwhile, analysts believe that Kia and Hyundai have more upsides left. This is because financial authorities are targeting companies with low price to book ratios as they try to resolve the Korean Discount. For companies with sufficient liquidity, investors can also expect additional shareholder return policies such as increased dividends. As of Jan. 31, Kia’s PBR was 0.90 and Hyundai’s 0.55.