Samsung Securities lowered Kia Corporation's target stock price from 240,000 won to 210,000 won, reflecting Q2 results that missed market expectations and increased volatility across the auto sector. The revision followed Kia's Q2 operating profit of 2.6296 trillion won, which underperformed consensus by 5.9% despite record sales volume. The brokerage maintained its BUY rating, citing anticipated second-half recovery driven by hybrid vehicle expansion and improved product mix.
Samsung Securities Applies 9x PER to Kia Target Price
Im Eun-young, a Samsung Securities analyst, reduced Kia's target price from 240,000 won to 210,000 won, a 12.5% downward adjustment. The analyst applied a target price-earnings ratio (PER) of 9x, down 10% from the previous level, reflecting Toyota's 12-month forward PER.
Kia Reports Q2 Revenue Growth and Profit Decline
Kia reported Q2 revenue of 33 trillion won and operating profit of 2.6296 trillion won. Revenue increased 12.6% year-over-year, while operating profit declined 4.9%. Revenue exceeded market expectations by 2.5%, but operating profit fell short by 5.9%.
Q2 sales volume reached a record high, but profitability underperformed expectations. Im explained that Kia increased sales amid declining global auto demand, but expanded EV sales incentives in Europe to compete with Chinese manufacturers. The higher proportion of EV sales eroded profitability.
Incentive expansion and pricing adjustments reduced profit by approximately 723 billion won, while sales mix changes accounted for an additional 178 billion won decline. Foreign exchange effects on warranty provisions also negatively impacted results. Excluding tariff impacts, operating profit was estimated at approximately 2.7 trillion won, below Hyundai Motor's 2.85 trillion won.
Kia Maintains Full-Year Guidance of 10.2 Trillion Won Operating Profit
Samsung Securities forecast Q3 revenue of 32.4 trillion won and operating profit of 2.8 trillion won, exceeding the market consensus of 2.6 trillion won. The brokerage projected increased sales of high-margin hybrid vehicles in the U.S. following expanded production of Telluride and Sportage HEV models. European EV incentives that impacted first-half results face limited expansion potential, and the growth rate of battery electric vehicle (BEV) sales share is expected to slow, improving product mix.
Kia maintained its full-year guidance of 3.35 million wholesale units, 3.31 million retail units, and 10.2 trillion won operating profit.
FAQ
Why did Samsung Securities lower Kia's target stock price?
Samsung Securities lowered Kia's target price from 240,000 won to 210,000 won due to Q2 operating profit missing market expectations by 5.9% and increased volatility across the auto sector.
What were Kia's Q2 financial results?
Kia reported Q2 revenue of 33 trillion won (up 12.6% year-over-year) and operating profit of 2.6296 trillion won (down 4.9% year-over-year). Revenue beat consensus by 2.5%, but profit missed by 5.9%.
What is Kia's full-year guidance for operating profit?
Kia maintained its full-year guidance of 10.2 trillion won operating profit, alongside 3.35 million wholesale units and 3.31 million retail units.
