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Kia's market cap surpasses Hyundai Motor's

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Kia's EV3 concept car is unveiled at the LA Auto Show during a media preview day press conference for Automobility LA in Los Angeles, California, Nov. 16, 2023. AFP-Yonhap

Kia's EV3 concept car is unveiled at the LA Auto Show during a media preview day press conference for Automobility LA in Los Angeles, California, Nov. 16, 2023. AFP-Yonhap

Carmaker's short-term growth plan attracts more attention from investors
By Lee Min-hyung

Kia has exceeded Hyundai Motor in corporate value for the first time in history, as what has long been considered a smaller carmaker is attracting more attention from investors due to its more evidently promising short-term growth strategies, according to analysts and experts, Thursday.

Data from the Korea Exchange showed that Kia's market capitalization reached a new high of 41.37 trillion won ($31.04 billion) as of market closing on Wednesday, surpassing that of Hyundai Motor by a margin of around 200 billion won.

This surprised investors and market watchers, as Kia was once perceived as a sub-brand of Hyundai Motor Group. But the paradigm is changing at an alarming pace, as Kia is strengthening its brand identity rapidly with solid earnings and stock growth.

Even if Hyundai Motor regains its spot as the nation's most valuable carmaker on Thursday, its gap with Kia is still within a narrow margin.

Market analysts and experts argued Kia's stunning rise was driven by what appears to be the firm's more concrete short-term growth strategy than Hyundai Motor.

"Given their surprising earnings result, it is hard to say that shares of Hyundai Motor and Kia are overvalued despite their recent rally," said Kim Pil-soo, an automotive technology professor at Daelim University College. "Kia looks to have appealed more to investors with its short-term growth strategy focusing on mass production of more price-competitive electric vehicles (EVs) and its expansion into its modular purpose-built vehicles (PBVs)."

Kia's stock rally is particularly noteworthy in that it has less than half the number of employees as Hyundai Motor, according to Kim.

Data from Hyundai Motor Group showed that the number of Kia's employees came in at 52,871 as of the end of 2023, while Hyundai Motor had more than 126,000 during the same period.

Even if Hyundai Motor hired twice as many workers, the earnings gap between the two carmakers would be narrower than expected. According to a recent regulatory filing, Kia reported a record-high operating profit of 11.6 trillion won for 2023, while Hyundai Motor reported 15.13 trillion won.

Analysts also argued that Kia will be able to extend its stock momentum this year.

"Kia is forecast to maintain its solid earnings momentum with quality growth this year, driven by the planned expansion of its EV lineup here and abroad," Hana Securities analyst Song Seon-jae said. Kia will also be able to defend itself against any possible sharp stock falls this year, according to the analyst, with its enhanced shareholder return policy of buying back its own shares worth 500 billion won.

Nam Joo-shin, an analyst at Kyobo Securities, expressed a similar sentiment, saying that the firm is still attracting investments due to a shareholder-friendly policy and decent sales of its EVs in the United States and Europe.

On Thursday, Kia's stock price closed up 3.3 percent at 106,300 won per share, while Hyundai Motor logged a bigger gain of 6.89 percent and closed at 208,000 won per share. Kia's market capitalization reached 42.73 trillion won, slightly behind the 43.99 trillion won of Hyundai Motor.

Lee Min-hyung


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