Hyundai Motor and Kia’s market capitalization gap of KRW 67 trillion
The stock price gap widened by 378% this year
Focused expectations on benefiting from new robot projects
The market capitalization gap between Hyundai Motor and Kia, which represent the domestic automobile industry, is widening. Analysts say that this is due to the expectation that the benefits of new businesses, including robots, will be concentrated on Hyundai Motor.
According to the Korea Exchange on the 16th, Hyundai Motor recorded 118.21 percent growth this year (as of the closing price on the 15th), but Kia only rose 37.52 percent during the same period.
As of the closing price on the 15th, Hyundai Motor’s market capitalization recorded 132.4783 trillion won and Kia’s market capitalization recorded 65.3942 trillion won, respectively. The gap between the two has widened to 67.841 trillion won.
This is an increase of about 378% compared to 14.36 trillion won recorded at the beginning of the year. However, it has decreased slightly compared to the 87.2372 trillion won gap recorded on the 1st.
This is due to the expectation that the benefits from new businesses such as robots and physical artificial intelligence (AI), which are driving Hyundai Motor’s stock price, can be concentrated on Hyundai Motor.
Kim Yong-min, a researcher at Yuanta Securities, said, “Hyundai Motor’s 12-month price-earnings ratio (PER) is receiving a premium of more than 80% compared to Kia,” adding, “Simple figures such as Boston Dynamics (BD) share values cannot explain this, and we believe that this valuation gap eventually highlights Hyundai Motor’s role as a control tower, which has the right to decide on new businesses, including robots.”
According to the analysis of Yuanta Securities, Hyundai Motor’s PER premium level compared to Kia is far beyond the range (-9-35%) recorded over the past decade.
In fact, the R&D costs and the acquisition of intangible assets that Hyundai Motor and Kia are spending for new businesses are getting bigger.
According to the Financial Supervisory Service’s Electronic Disclosure System (DART), Hyundai Motor (1.898 trillion won) spent 360.2 billion won more in R&D than Kia (729.6 billion won) in the first quarter of this year.
In 2024, the gap recorded about 726.3 billion won and 877 billion won last year. In other words, in the first quarter of this year alone, there was a gap of half that of 2024.
In addition, if the R&D cost gap in the first quarter is maintained throughout this year, there will be a difference of about KRW 1.44 trillion this year. This means that Hyundai Motor and Kia are increasingly investing in R&D. The gap in R&D costs between the two companies, which occurred after 2024, amounts to 1.9635 trillion won.
This is leading to a gap in intangible assets held by the two companies.
Hyundai Motor’s intangible assets have increased by 1.9183 trillion won since the end of 2024. On the other hand, Kia’s intangible assets only increased by 753.1 billion won. This means that Hyundai Motor had about 2.5 times more intangible assets.
Intangible assets are illiquid assets that companies such as technology and IP hold and use for a long time and are expected to gain economic benefits in the future. Although recognized as an asset, profits are sometimes reduced because continuous depreciation occurs after acquisition. In fact, Hyundai has recognized higher intangible asset amortization costs compared to hunger every year.
Still, it is possible to expand new businesses and increase valuation based on intangible assets, but Hyundai Motor has begun to earn a share price premium based on its robot business.
Researcher Kim said, “The fact that Hyundai Motor’s acquisition ratio of intangible assets is overwhelmingly higher than that of Kia shows that Hyundai Motor is at the helm in new businesses,” adding, “Hyundai Motor’s excessive cost burden, which is somewhat focused on strengthening the competitiveness of the finished car market, could not lead to a significant valuation premium, but it is now enjoying an overwhelming premium related to robotics.”
