Corporate Logo(source: kiamedia.com)
Hana Securities announced on April 28 that it had lowered its target price for Kia(000270) from 140,000 won to 125,000 won, citing expected earnings deterioration and intensified competition in the second half of the year due to newly imposed U.S. tariffs.
Nevertheless, it maintained a "Buy" rating, noting that the planned 700 billion won share buyback and cancellation this year could lead to an increase in earnings per share (EPS), supporting the potential for a share price rise.
Kia reported an operating profit of 3.009 trillion won for the first quarter, down 12% year-on-year, falling short of market expectations.
The cost of goods sold ratio rose to 78.3%, up 2.1 percentage points (p) from the same period last year, while the selling, general, and administrative expenses ratio increased by 0.3%p to 11.0%, resulting in a 2.4%p decline in the operating margin.
Hana Securities analyzed that the changes in operating profit were negatively impacted by higher incentive payments (-444 billion won), a deterioration in the sales mix (-369 billion won), and increased other expenses (-239 billion won).
In a recent conference call, Kia stated that while advance demand driven by tariffs would likely sustain growth through the second quarter, there are concerns about a potential demand decline in the second half. It explained that after inventory depletion around June to July, competitors are expected to implement strategies such as price hikes, while Kia plans to respond based on market conditions.
Hana Securities forecasted that although Kia experienced a weaker sales mix in the first quarter following the launch of models such as the Sorento, EV3, and EV4, the impact is expected to ease from the second quarter. Kia plans to introduce new models including the Tasman and Sportage, expand volumes of the Carnival Hybrid Electric Vehicle (HEV) and Sportage HEV, and begin local production of the EV6 and EV9 in the U.S. The company is aiming to stabilize its sales mix through a diversified new model lineup and production expansion.
Song Sun-jae, an analyst at Hana Securities, commented, “Kia expects its sales mix to improve from the second quarter with the expansion of higher-priced models,” adding, “Although earnings deterioration is anticipated in the second half due to tariff impacts, the share price is more likely to trend upward rather than downward.”
*[KOSPI]Kia(000270) is a leading domestic automobile manufacturer, with a diverse lineup including Morning, Stinger, K9, Sorento, and EV9, and is expanding its Purpose-Based Mobility(PBV) and service businesses aiming to provide sustainable mobility solutions. The market capitalization is 35.07trillion billion won(as of April 25, 2025, closing price).
Corporate Logo(source: kiamedia.com)
Hana Securities announced on April 28 that it had lowered its target price for Kia(000270) from 140,000 won to 125,000 won, citing expected earnings deterioration and intensified competition in the second half of the year due to newly imposed U.S. tariffs.
Nevertheless, it maintained a "Buy" rating, noting that the planned 700 billion won share buyback and cancellation this year could lead to an increase in earnings per share (EPS), supporting the potential for a share price rise.
Kia reported an operating profit of 3.009 trillion won for the first quarter, down 12% year-on-year, falling short of market expectations.
The cost of goods sold ratio rose to 78.3%, up 2.1 percentage points (p) from the same period last year, while the selling, general, and administrative expenses ratio increased by 0.3%p to 11.0%, resulting in a 2.4%p decline in the operating margin.
Hana Securities analyzed that the changes in operating profit were negatively impacted by higher incentive payments (-444 billion won), a deterioration in the sales mix (-369 billion won), and increased other expenses (-239 billion won).
In a recent conference call, Kia stated that while advance demand driven by tariffs would likely sustain growth through the second quarter, there are concerns about a potential demand decline in the second half. It explained that after inventory depletion around June to July, competitors are expected to implement strategies such as price hikes, while Kia plans to respond based on market conditions.
Hana Securities forecasted that although Kia experienced a weaker sales mix in the first quarter following the launch of models such as the Sorento, EV3, and EV4, the impact is expected to ease from the second quarter. Kia plans to introduce new models including the Tasman and Sportage, expand volumes of the Carnival Hybrid Electric Vehicle (HEV) and Sportage HEV, and begin local production of the EV6 and EV9 in the U.S. The company is aiming to stabilize its sales mix through a diversified new model lineup and production expansion.
Song Sun-jae, an analyst at Hana Securities, commented, “Kia expects its sales mix to improve from the second quarter with the expansion of higher-priced models,” adding, “Although earnings deterioration is anticipated in the second half due to tariff impacts, the share price is more likely to trend upward rather than downward.”
*[KOSPI]Kia(000270) is a leading domestic automobile manufacturer, with a diverse lineup including Morning, Stinger, K9, Sorento, and EV9, and is expanding its Purpose-Based Mobility(PBV) and service businesses aiming to provide sustainable mobility solutions. The market capitalization is 35.07trillion billion won(as of April 25, 2025, closing price).