July 19, 2011 Company Report Hyundai Motor (005380 KS) Auto Quality 2Q11 earnings to pave the way for a strong 2012 Michael Yun +822-768-4169
[email protected] Maintain Buy rating with TP of W330,000 Young-Ho Park We maintain our Buy rating on Hyundai Motor (HMC) with a 12-month target price +822-768-4169 of W330,000. Our target price was derived by applying a target EV/EBITDA multiple
[email protected] of 6.8x to HMCÊs consolidated EBITDA (including the companyÊs global factories, Michelle Choi financial subsidiaries, and other affiliates). We forecast HMCÊs global 2011 EBITDA +822-768-4169 at W10.8tr, with a net debt of W2.6tr and an investment value of W10.1tr. Our
[email protected] target market cap for the company of W81.4tr is equivalent to a P/E of 10.6x, which we believe is fair. Also, on a market cap basis (value of common shares and preferred shares divided by net profit), HMCÊs shares are currently trading at a P/E of 7.5x. As such, we believe the auto giantÊs stock is undervalued. Buy (Maintain) 2Q11 Net profit to reach W2.2tr, setting a record once again Target Price (12M, W) 330,000 Share Price (11/07/01,W) 236,500 We forecast HMCÊs 2Q11 earnings under K-IFRS to exceed market expectations. Expected Return (%) 39.5 Revenues are estimated to have increased by 12.7% QoQ to W20.6tr, with global EPS Growth (11F, %) 41.0 retail sales volume reaching 1.05mn units (up 12.5% YoY; up 15.2% QoQ).