[Edaily Reporter Kim Kyung-eun ] On the 24th, Yuanta Securities Korea lowered its target price for HyundaiMotor(005380) to 570,000 won, a 17.4% reduction from the previous level, reflecting uncertainty in the global automotive market. However, the firm upgraded its investment rating from “Hold” to “Buy,” citing expectations that profitability will improve in the second half of the year due to the normalization of production and the launch of new models.

Kim Yong-min, an analyst at Yuanta Securities Korea, stated on the same day, “Since we lowered our investment rating in our previous report, the stock price has fallen significantly, making the stock more attractive to investors again.”

He cited two reasons for lowering the target price: it is difficult to justify the high valuation based solely on expectations for robotics, and uncertainty remains in the global automotive market. Accordingly, he lowered the target price-to-earnings ratio (PER) for the automotive sector from 15x to 10x.

HyundaiMotor reported second-quarter consolidated revenue of 49.2153 trillion won and operating profit of 2.8509 trillion won. Revenue increased by 1.9% year-over-year, but operating profit decreased by 20.8%. The operating profit margin stood at 5.8%, falling short of the annual target range (6.3–7.3%).

Commenting on this, Analyst Kim noted, “The company achieved revenue growth driven by the weak won and strong sales of hybrid vehicles (HEVs),” but added, “From an operating profit perspective, foreign exchange gains were offset by the rise in the year-end exchange rate; profits were reduced due to parts supply issues for high-margin vehicles; and incentives per vehicle increased relative to the rise in average selling price (ASP) caused by intensifying market competition.”

However, he forecast that profitability would gradually improve in the second half of the year. He expected production to normalize in the third quarter as parts supply issues are resolved, leading to an improvement in the automotive division’s operating profit margin. He also projected that the burden of incentives would ease by leveraging restocking demand.

In the fourth quarter, profitability in the automotive division is expected to improve further as sales of new models—such as the new Tucson, Avante, Genesis GV80 Hybrid, and GV90—are fully reflected in the results. Analyst Kim assessed, “The impact of new models in the fourth quarter will signal the start of the 2027 profitability recovery cycle.”

Furthermore, the analysis noted that as the premium on common stock—which had widened due to expectations surrounding robotics—has largely normalized, the investment appeal of preferred stock is expected to come to the fore. The price premium of HyundaiMotor’s common stock relative to its preferred stock, which had widened to as much as 170% at one point in June, has now narrowed to around 110%.

Analyst Kim stated, “Considering the improvement in earnings in the second half of the year and the recovery in profitability in 2027, preferred shares are likely to offer annual shareholder returns of at least 16,000 won,” adding, “Based on the current stock price, the annual shareholder return yield is over 7.7%, making it highly attractive.”