Hyundai Motor’s shares fall to 9-month low; new mobility key to rebound

Shares of South Korea’s top automaker Hyundai Motor Co. have fallen to their lowest level in nine months, bucking the trend of its global peers that have performed well despite a protracted shortage of automotive chips.

Hyundai Motor declined 0.7% to 200,000 won in afternoon trade in Seoul on Thursday, underperforming the broader Kospi market’s 0.6% rise. The stock has fallen to an intraday low of 199,000 won in the morning session, hitting the lowest level since Dec. 28, 2020.

As Hyundai Motor underperforms the market for weeks, analysts are slashing their target price for the automaker.

Meritz Securities has cut the brokerage’s target price for Hyundai Motor to 285,000 won, down 13.6% from 330,000 won earlier. NH Investment & Securities has also lowered its target price to 300,000 won from 333,000 won previously.

Analysts attributed Hyundai’s weak share performance to the persistent auto chip shortages, which have disrupted production at most carmakers globally since the start of the year.

Global automakers initially expected the shortage to ease considerably from the third quarter, but such a view has been pushed back to next year at the earliest.

Hyundai Motor and its sister firm Kia Corp. have also halted their production lines intermittently since January, disrupting the delivery of the premium Genesis models as well as Hyundai’s latest all-electric SUV, the IONIQ 5.

FUTURE MOBILITY KEY TO FURTHER GROWTH

Analysts say Hyundai Motor’s earnings won’t likely improve until after the global auto chip shortage eases next year.

NH Investment expects the automaker to post 1. 64 trillion won ($1.38 billion) in operating profit in the third quarter, below the market consensus of 1.8 trillion won.

“Hyundai’s production will be normalized next year, when the company is forecast to post a record annual operating profit of 8.7 trillion won,” said NH Investment analyst Cho Soo-hong.

In its own efforts to ease the chip shortage, Hyundai said earlier this week that it plans to develop alternative components to automotive chips to prepare for prolonged supply disruptions.

The significant decline of Hyundai Motor’s share price compares with the steady gains in share prices of its global peers.

Japan’s Toyota Motor Corp. recently climbed to the highest level, rising 30.7% year to date. Shares of Ford Motor and General Motors have also risen 68% and 30.5% so far this year, respectively.

Analysts say Hyundai Motor needs a catalyst to move higher from the current level.

“In February, Hyundai said it is reviewing the possibility of a business tie-up with several companies over the advancement of self-driving electric vehicles. But little process has been reported since then. The company needs to be more aggressive with its future mobility business,” said Meritz Securities analyst Kim Joon-sung.

In August, Hyundai and its US mobility joint venture Motional Inc. unveiled their first autonomous robotaxi based on Hyundai’s IONIQ 5.

Equipped with the hardware and software needed for Level 4 self-driving capabilities, the first fleet of the robotaxis will be delivered to US ride-sharing platform Lyft in 2023 for commercial services, according to Hyundai.

Write to Hyung-gyo Seo at seogyo@hankyung.com
In-Soo Nam edited this article.