The stocks of automobile companies are being recommended, with investment in automobile stocks in the first half of the year expected to be more profitable than in the second half. This is due to the fact that major overseas automakers, including those in the U.S., will begin full-scale restructuring in 2010. As a result, the glut in the U.S. automobile market will be solved and demand is expected to recover. Furthermore, major automakers are expected to begin investing in building and expanding new facilities in emerging markets in 2011.
Accordingly, Hyundai Motor and other Korean automakers are expected to enjoy strong sales in emerging markets by the end of the first half of 2010, while Japanese automakers, the archrivals of Korean automakers, are not expected to improve their sales and business performances by the end of 2010. Furthermore, Korean automakers are to launch new models in 2010, while foreign automakers are not expected to launch any new models until early 2011. All these factors suggest that Korean automakers will be able to enjoy strong new model sales and lower marketing costs.
With most overseas competitors planning to launch new models beginning early 2011, the outlook for Hyundai, Kia and Hyundai Mobis is optimistic,, with Kia Motors in particular expected to enjoy strong sales, with new car sales expected to account for 44.7% in its total sales in 2010. This will also contribute to an improvement in sales mix.
Kia Motors is also expected to enjoy a remarkable increase in sales in China and the U.S., with sales in the Chinese market expected to record 318,000 vehicles, up 32.6% from a year earlier, thanks to the launch of new models such as the Forte and Soul. It is also expected that Kia will sell 334,000 units, up 11.3% from a year earlier thanks to launches of new models.
Furthermore, profitability is predicted to rise thanks to the integration of various platforms. Kia Motors is expected to improve its business performance thanks to the full operation of its factory in China, strong sales by its overseas sales corporations and a decrease in financial costs.
It is forecast that Hyundai Motor will enjoy strong sales thanks to good performances in the Korean market and emerging markets, including China. In particular, investors are being advised to pay attention to an increase in profits and a better cash flow, with its net asset value expected to grow 14.8% to 33.2 trillion won. Accordingly, application of a high PBR multiple seems valid in valuation.
It is expected that sales of Hyundai Motor will increase 8.9% from a year earlier, while its market share will rise 0.13%p to 5.3%. The company’s overseas production is expected to reach 1.75 million, an increase of 14.8% from 2010, while its overseas production volume will be bigger than production volume in Korea for the first time. Furthermore, its equity income on investments is expected to increase 120% to 661 billion won. It is expected that new car sales in 2010 will account for 33.5% in the total sales, up from 11.3% in 2009. It is also being predicted that Hyundai Mobis will enjoy high performances on a mid to long-term basis following an increase in production by Hyundai and Kia, which the company exclusively supplies products to.