Equity Analysis /
South Korea

KR : KIA Motors - Record-breaker

    Kyung Jae Hwang
    Kyung Jae Hwang

    Head of Regional Offshore & Marine

    19 January 2021
    Published byCGS-CIMB

    For 4Q20F, we expect Kia to post all-time-high revenue of W1.64tr. For the first time, Kia’s EBIT/unit (W1.97m) likely surpassed HMC’s by +W0.6m. In FY21F, overseas-led demand recovery (+15% vs. domestic -5%) should lead to higher EBIT/unit for Kia than HMC given Kia’s higher blended ASP. Assuming a 40% unit price hike for auto semiconductors, our sensitivity analysis shows W707bn/W478bn EBIT erosion as inevitable for HMC/Kia. However, we believe Kia can still achieve W3.8tr FY21F EBIT under forex and chip price pressure. We raise our FY20-22F EPS and TP to W100,000. Reiterate Add; prefer Kia over HMC for higher ROE and dividend prospects.