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Hyundai Motor
- Sector: Manufacturing
- Sub Sector: Automotive
- Country: Korea
- Bond: HYNMTR 5.1 30
- Indicative Yield-to-Maturity (YTM): 4.83%
- Credit Rating : A3 / A- / A-
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Fundamental View
AS OF 22 May 2025- Hyundai Motor Group posted solid 1Q25 results and maintained its FY25 sales and consolidated operating profit guidance. While we continue to expect lower FY25 automotive profitability owing to tariff impacts on its US vehicle sales, which account for 25% of its global unit sales, we expect the tariff headwind to be partially offset by favorable currency and higher financial services profitability along with support by the South Korean government for the automotive sector. We expect these tariff mitigation factors to alleviate our previous concerns regarding potential negative rating actions.
Business Description
AS OF 22 May 2025- Hyundai Motor Co., Ltd. engages in the manufacture and distribution of motor vehicles and parts. It operates through the following business areas: Vehicle, Financial and Other. The Vehicle division offers motor vehicles. The Financial division provides financing, leasing and credit cards. The Other division includes manufacture of railways. The company was founded on December 29, 1967, and is headquartered in Seoul, South Korea.
- Hyundai Capital America benefits from a support agreement with Hyundai Motor (HMC). HCA investor relations confirmed its support (keepwell) agreement contains a fixed charge coverage provision that it views as particularly strong compared to other peers.
Risk & Catalysts
AS OF 22 May 2025- Hyundai and Kia both maintained FY25 sales and consolidated operating profit guidance – which did not include the potential impact of tariffs – citing both uncertainty surrounding tariff implementation, especially for USMCA-compliant parts, and strategies to mitigate the tariff impact. Both companies called out the likelihood of price increases to mitigate the tariff impact, while Hyundai management highlighted additional mitigation strategies in their earnings conference call. On a combined basis, the Hyundai Motor Group (HMG) targets FY25 wholesale unit growth of 2% to 7.4 mn units, revenue growth of 5% to 6%, and a consolidated operating profit margin of 8.8% at the midpoint of the range for YoY margin contraction of 40 bp.
- The company’s FY25 consolidated operating profit could also benefit from higher captive finance profit and favorable currency impacts related to the weak Korean won, two factors that boosted its 1Q25 profit. The South Korean government announced emergency support for the auto sector, including financial aid and tax cuts to mitigate the impact of US tariffs on imported vehicles.
Key Metric
AS OF 22 May 2025| KRW bn | FY21 | FY22 | FY23 | FY24 | LTM 1Q25 |
|---|---|---|---|---|---|
| Revenue | 94,143 | 113,718 | 130,150 | 136,725 | 139,725 |
| EBIT | 5,459 | 8,950 | 15,440 | 14,189 | 13,945 |
| EBIT Margin | 5.8% | 7.9% | 11.9% | 10.4% | 10.5% |
| EBITDA | 10,015 | 13,998 | 20,387 | 18,476 | 18,237 |
| EBITDA Margin | 10.6% | 12.3% | 15.7% | 13.5% | 13.9% |
| Total Liquidity | 19,745 | 26,639 | 26,507 | 27,488 | 23,397 |
| Net Debt | (5,202) | (11,035) | (10,916) | (11,799) | (15,252) |
| Total Debt | 12,569 | 12,940 | 12,940 | 12,940 | 5,805 |
| Gross Leverage | 1.3x | 0.9x | 0.6x | 0.7x | 0.3x |
| Net Leverage | -0.5x | -0.8x | -0.5x | -0.6x | -0.8x |
CreditSight View Comment
AS OF 03 Jul 2025We upgrade our recommendation on notes of Hyundai Capital America (HYNMTR), Hyundai Capital Services (HYUCAP), and Kia Corp. (KIA) to Outperform from Market perform based on our view the company’s tariff mitigation strategies, its financial services and currency tailwinds, and South Korean automotive sector emergency aid initiatives should help support the company’s profit outlook and enable it to avoid credit rating downgrades. Our recommendation is based on relative value, its geographic diversification, increasing innovative hybrid and EV offerings, and its solid brand positioning within the affordable vehicle category.
Recommendation Reviewed: July 03, 2025
Recommendation Changed: April 28, 2025
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