South Korean stock firms now estimate that Hyundai Motor Company’s third quarter operating profit will be $1.13 billion (1.3 trillion KRW) which is 21.7% higher than the market consensus.
Such estimation comes from the fact that the company is making operating surplus despite the COVID-19 pandemic and that it is enjoying large sales of Genesis models and SUVs that bring in high profits and growing sales in rising countries. Many stock firms believe that the future is bright for Hyundai Motor Company by making early investments in future vehicles such as electric vehicle and hydrogen-fueled vehicle.
According to the industry on Monday, KB Securities estimated that Hyundai Motor Company’s third quarter operating profit would be 1.13 billion which is a 249.5% jump compared to the third quarter last year. Its new estimation is also 2.7% higher than its previous estimation.
Prior to KB Securities’ estimation, FnGuide estimated that Hyundai’s third quarter operating profit would be $946 million (1.0872 trillion KRW). Its estimated around $809 million (930 billion KRW) right after Hyundai announced its second quarter performance. Its latest estimation on the company’s third quarter operating profit is 187% higher than its estimation on the company’s third quarter operating profit from last year when it was $329 million (378.5 billion KRW). This is the first time Hyundai Motor Company’s quarterly operating profit will surpass $870 million (1 trillion KRW) this year.
Hyundai’s second quarter performance is the reason why stock firms are upping the market consensus. Although the company’s second quarter operating profit, which was $514 million (590.3 billion KRW), decreased by 52.3% compared to the second quarter last year, it recorded an earning surprise as it exceeded 84.9% compared to the consensus that was $278 million (319.2 billion KRW). Actually, Hyundai was the only multinational automotive manufacturer besides Tesla that recorded a surplus in the second quarter.
Hyundai has been able to improve its performance this year by experiencing increased sales of highly profitable models through South Korea’s successful prevention towards the coronavirus. While other multinational automotive manufacturers are suffering from low productions and sales due to the coronavirus, Hyundai has been able to maintain its business by focusing on sales of highly profitable models such as Genesis models and SUVs.

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<Rendering images of Hyundai Motor Company’s lineup of IONIQ (Starting from the left: IONIQ 6, IONIQ 7, IONIQ 5)>

Many stock firms believe in bright future for Hyundai Motor Company. Hyundai Motor Company is planning to launch electric vehicles that are based on its own platform (E-GMP) starting from next year. Starting with a midsize CUV IONIQ 5 next year, it plans to launch a midsize sedan IONIQ 6 and a full-size SUV IONIQ 7 in 2022 and 2024 respectively. The company can expect additional leverages such as economy of scale as it starts to increase production of electric vehicles.
The company’s competitive edge in hydrogen-fueled vehicles is also unrivaled. It has started to sell its hydrogen cars and fuel cell systems on full scale this year and it is leading an expansion of the hydrogen industry through collaboration in construction projects of related infrastructures.
KB Securities estimates that Hyundai’s operating profit for this year will be $3.65 billion (4.2 trillion KRW) which is a 15.7% jump compared to last year and is 5.9% higher than the current consensus. Based on the current trend of Hyundai’s sales, KB Securities also increased its estimations on Hyundai’s operating profits in 2021 and 2022 by $259 million (297.3 billion KRW) and $575 million (660.4 billion KRW) respectively.
FnGuide estimates that Hyundai’s fourth quarter operating profit will be $1.17 billion (1.3494 trillion KRW). For the company’s annual operating profit, FnGuide estimates that the company will earn $3.43 billion (3.9428 trillion KRW), $5.14 billion (5.9062 trillion KRW), and $5.74 billion (6.6001 trillion KRW) in 2020, 2021, and 2022 respectively.
“The global automotive market is recovering at a faster rate.” said Kang Seong-jin who is a researcher at KB Securities. “Contribution margin for Hyundai Motor Company per unit has increased as it has successfully replaced engine cars with eco-friendly cars and the company’s competitive edge in electric vehicles will increase by launching its own electric vehicle platform.”
Staff Reporter Jung, Chiyeon |