Hyundai Motors Corporation last update jan. 2 nd,2019
Hyundai + Kia is 4th largest automobile manufacturer in vehicle numbers and number 10 automobile manufacturer in revenues. Hyundai Motors generates annual revenues of about 84 bn$ and a net profit of 1.8 bn$ or 6.7$/share.
It is more difficult to find financial information about Hyundai Motors as for other companies I analyse. It is difficult to extract facts and numbers from the published company reports and news.
Potential motivation to buy Hyundai Motors stock: Hope that the company will turn around the profit situation. Profits are declining since years and still ongoing to decline!
Risk & Chances
The company plans to allocate 30 to 50% of annual Free Cash Flow for shareholder returns.
The number of sold cars jan - sept 18 increased by 2.7% vs. 2017. Hyundai forcasts a further increase for 2019. That means sales is not the issue. The issue of Hyundai Motors is the declining profits. The profits are sharply decreasing since 2015. I do not see anything that might turn around the situation yet.
Not all decisions of Hyundai Motors follow the business logic. Ex. the company paid in 2014 10bn$ for a real estate in Seoul (2). I do not know the background. Potentially it could be a political background.
Some Data & Information
2019/01/02 Hyundai Motors forcasts a further increase of saled cars in 2019.
2018/12/17 Actually a class action law suit is prepared against Hyundai Motors on fire accidents with some of its cars (6)
"Because of temporary cost factors such as expansion of World Cup marketing activities, recall of airbag controllers, and application of new engine diagnostics technology called 'KSDS' in the U.S., operating expenses increased and operating profit decreased," the company explained.(3) This is not really the information I like to read. New engine diagnostic systems and sport marketing events are things that occur regularly.
SEOUL, Sept. 30 (Yonhap) -- South Korean autos will likely be hard hit if the United States decides to slap 25 percent tariffs on foreign vehicles and auto parts under its Trade Expansion Act, a local think tank said Sunday... In 2017, Japan exported 1.96 million cars to the United States, while South Korea shipped out 720,000, with numbers from Germany standing at 710,000 vehicles...The reason for the increase is that South Korean cars sold in the U.S. have an average operating profit of 4.3 percent, the lowest among countries that ship vehicles in the country.. (1)
Profit Growth: 2017: -20.5%, 2016 -12.1%, 2015 -14.9%
Equity: 67 bn$
Number of outstanding stocks: Common stock 206,617,212; 1 st Preferred stock 22,859,122; 2 nd Preferred stock 36,164,489 3 rd Preferred stock 2,448,637 Total 268 mio. shares
Treasury stocks: Common stock 15,359,818 1 st preferred stock 2,445,984 2 nd preferred stock 1,740,855 3 rd preferred stock 48,817
This is not a recommendation or proposal to do anything. It is my private personal opinion. I`m not independing as I own a position of Hyundai Motors shares.
ROK Location for Automobile Manufacturing
GM put the business location ROK shortly ago in question. High costs an aggressive labor union created a loss of 1.5 bn$ in the last 3 years. Actually there was a strike at Hyundai as the management planned to establish a new plant with lower wages (5). It seems that automobile manufacturing in the ROK faces similar challenges as that of other saturated industrial countries. The German car manufacturers faced similar challenges in the last decades of the last centuries. They outsourced non core activities, established lean structures with plenty of lower paid contractors and lease workers, aggessive purchasing put more volume to lower cost countries. I hope the Hyundai management already smells the napalm.
Business Location ROK
the ROK was one of the poorest countries of the world after the war in 1953. With very hard work and discipline they managed to become a developed country with a similar standard of living as South European countries. For ex. the Samsung Electronics memory chip division passed its international competitors by working 6 - 7 days a week achieving a 1/2 year advantage vs. international competition at the turn of the millenium. One specific point in the ROK were always the very aggressive labor disputes. Now it seems as the ROK is very saturated like other established industrial nations. The left government elected 2017 seem to do destructive politics in favor of unions, gender, climate hoax, against nuclear power. The economic growth decreased to the lowest level since 9 yrs. (Q3/18). I hope that the government or at least the potential voters smell the napalm.
Hyundai Motors IR pages.
(7) 2019/01/02 https://www.finanzen.net/nachricht/nachricht-6983005
(5) 2018/12/06 https://www.finanzen.net/nachricht/aktien/hyundai-beschaeftigte-protestieren-gegen-plaene-fuer-niedriglohn-fabrik-6910914
4. 2018/10 https://eu.detroitnews.com/story/business/autos/general-motors/2018/04/12/general-motors-south-korea/33770137/
3. 2018/10 http://www.businesskorea.co.kr/news/articleView.html?idxno=26014