Foreign organizations merge like Hyundai Motors before the increase in corporate value
In February, foreigners bought KRW 1.5836 trillion and institutions bought KRW 538.8 billion.
Dissemination of business structure for eco-friendly vehicles such as hybrid electric vehicles
Dividend yield of 4.7%, which is a reasonable bank term deposit interest rate
Foreign and institutional investors have rallied behind Hyundai Motors ahead of the government’s ‘Corporate Value Up Programme’.
Expectations were expressed by buying a total of 2 trillion won in February. It is analyzed that the buying trend reflects the expectation that Hyundai Motor Company’s strength in eco-friendly vehicles such as electric and hybrid vehicles will lead to increased performance in the future and strengthen the shareholder returns desired in the corporate value up program.
According to the Korea Exchange on the 24th, Hyundai Motor Company was first in net purchases by foreigners from February 1st to the 23rd. During this period, 1.5836 trillion won stocks were bought.
During the same period, institutions also bought the most Hyundai Motors on an individual stock basis, with the net purchase amount being 538.8 billion won.
In this way, it is unusual for a particular stock to rank first in net purchases by foreigners and institutions, with the exception of Samsung Electronics, which ranks first in domestic market capitalization.
The stock market believes that this buying trend is due to the attraction of undervaluation with a price-to-book ratio (PBR) of less than 1x and the influence of the corporate value-up program scheduled for the 26th.
The government decided to launch a ‘Corporate Value Up Programme’ as a measure to solve the problem of undervaluation of the domestic stock market.
Previously, Japan pushed for a similar policy, leading to a rise in the stock market, and companies with a PBR of less than 1x were mainly affected.
It is analyzed that Hyundai Motor Company is undervalued to the extent that its expected PBR at the end of 2024 is 0.64 times (based on Bloomberg).
In particular, while Toyota Japan focuses exclusively on hybrids (HEVs), Hyundai Motors has a balanced portfolio of eco-friendly vehicles, including HEVs and electric vehicles.
In 2023, HEVs accounted for 8.9% of Hyundai Motor Company’s sales, and electric vehicles accounted for 6.4% of sales.
Hyundai Motor Company’s dividend yield is 4.67%, which is better than the interest rate on term deposits in most domestic commercial banks. Hyundai Motor’s stock price rose 22% on February 23 this year.
In the case of Samsung Electronics, Korea’s undisputed leader in market capitalization, the dividend yield was 1.98%, which halved its attractiveness as a dividend stock.
The stock price has adjusted by 8% this year, and institutional selling (-501.4 billion won) in February seems to have had an impact.
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