[Edaily Reporter Kim Hyung-il ] NH INVESTMENT & SECURITIES has lowered its target price for KIA CORPORATION(000270)by 21.1% from the previous 190,000 won to 150,000 won, citing the possibility that the recovery in electric vehicle (EV) profitability may be delayed. The firm believes it is difficult to be optimistic about profitability improvement until cost-cutting efforts yield tangible results, especially as global price competition in the EV market continues and incentives are being scaled back. The investment rating remains “Buy.”

On the 2nd, NH INVESTMENT & SECURITIES analyst Haneul explained that, in connection with the target price reduction, the 2027 earnings per share (EPS) forecast was lowered by approximately 18%, and the target price-to-earnings (P/E) ratio was adjusted from 8.4x to 8.1x. The adjustment also reflects the narrowing of the valuation premium as the lull in new business momentum has prolonged.

KIA CORPORATION’s third-quarter revenue this year reached 31.6 trillion won, a 10.1% increase year-over-year. Operating profit rose 24.3% to 1.8183 trillion won but fell short of market consensus. Profitability improvements were limited despite increased wholesale sales and the easing of U.S. tariff burdens.

Cost pressures stemming from rising raw material prices amounted to 368 billion won, while the prolonged conflict in the Middle East resulted in an additional 209 billion won in costs. Burdens associated with increased incentives and price cuts during the expansion of electric vehicle sales also reached 727 billion won. Cost pressures and Middle East-related uncertainties are expected to persist in the fourth quarter.

Despite short-term profitability pressures, KIA CORPORATION is maintaining its strategy to expand EV sales. The company aims to secure cost competitiveness within the next two to three years and normalize EV profitability. It plans to reduce the cost of core components by approximately 10% annually over three years and improve profitability through economies of scale resulting from increased sales volume.

By region, the company is continuing its sales expansion strategy centered on hybrid electric vehicles (HEVs) in the U.S. and battery electric vehicles (BEVs) in Europe. However, analysts note that in Europe, the growing share of low-margin entry-level EVs means that increased market share is not translating into improved overall corporate profitability.

NH INVESTMENT & SECURITIES forecasts that KIA CORPORATION’s profitability will recover next year, driven by expanding HEV sales in the U.S. and the easing of external pressures such as the conflict in the Middle East. However, given the ongoing global price competition in the EV market, the firm believes a conservative approach is necessary until the reduction in incentives and cost-cutting efforts are reflected in actual earnings. KIA CORPORATION’s strategy is to strengthen its medium- to long-term competitiveness by expanding EV sales and reducing costs.