[Edaily Reporter Shin Ha-yeon ] On the 30th, NH INVESTMENT & SECURITIES stated that the valuation discount of KIA CORPORATION(000270)relative to HyundaiMotor has widened to an excessive level, but projected that it would normalize as the company expands into new businesses such as robotics. The firm maintained its “Buy” investment rating and target price of 220,000 won.

Ha Neul, an analyst at NH INVESTMENT & SECURITIES, stated, “KIA CORPORATION is recording the highest profitability among global automakers and continues to expand its global automotive sales market share based on this robust profitability.” He added, “With the launch of local production of the Sportage Hybrid (HEV) in June following the start of operations at the U.S. Meta Plant, we expect an expansion of market share in the U.S. and improved profitability.”

In particular, he highlighted the stock’s excessive undervaluation relative to HyundaiMotor. Analyst Ha noted, “KIA CORPORATION’s valuation discount relative to HyundaiMotor has recently widened to 48%,” adding, “This is significantly higher than the average discount rate of 22% from 2021 to 2023. As KIA CORPORATION’s role expands in the group’s new business initiatives, this discount is expected to narrow.” The equity structure of the robotics production subsidiary, to be announced in the future, was also cited as a factor for revaluation.

The firm also forecast solid second-quarter earnings. NH INVESTMENT & SECURITIES projected that second-quarter revenue would rise 9.3% year-over-year to 32.0835 trillion won, while operating profit would increase 1.6% to 2.8079 trillion won. It expected global sales growth to underpin earnings, driven by continued strong sales of hybrid vehicles in the U.S. and electric vehicles in South Korea and Europe.

However, the firm noted that the scope for profitability improvement would be limited due to the ongoing burden of U.S. tariffs, rising raw material costs driven by higher oil and metal prices, and expanded incentives resulting from intensifying competition in the European market.

Analyst Ha stated, “Despite solid growth in the core business, the current stock price does not fully reflect this,” adding, “If the company’s expanding role in the group’s new business ventures is confirmed, the valuation discount relative to HyundaiMotor will gradually narrow.”