Hyundai Motor losing market value amid investors’ upset (ATTN: A “KILLED” article before editing so it may contain lots of errors.) By Park Si-soo Hyundai Motor and its two affiliates have lost staggering 19 trillion won ($17.83 billion) in combined market value in one month, reflecting deep frustration among investors over the firms’ lavish spending last month to buy a plot of prime land in southern Seoul at a price triple the assessed value. The country’s biggest carmaker has decided to use its cash reserve to complete the 10.6 trillion won deal, damping optimism that it will raise shareholder payouts. Shares of Hyundai have plunged nearly 25 percent in Seoul trading during the period, to close at 162,000 won on Friday, its lowest close since August 2011. It was down 3.57 percent or 6,000 won from the previous day. The firm’s biggest affiliate Kia Motors has lost 15.8 percent of market value or 4.2 trillion won during the same period, while Hyundai Mobis has lost 9.7 percent or 2.3 trillion won. Hyundai Motor is responsible for paying 55 percent of the price, Kia 20 percent and Mobis the remainder. With 10 percent of the price paid in contract deposit late September, the three companies controlled by Chairman Chung Mong-koo, will make the remaining payments in installments by next September. The three companies reportedly have cash, near cash and short-term investments amounting to about $38 billion at the end of June. “We had hopes for a higher dividend, but those hopes are all gone,” said Heo Pil-seok, chief executive officer at Midas International Asset Management. Kim Joon-sung, an analyst at Meritz Securities, expressed a similar view, saying the companies need to “come up with ways to increase dividends in order to regain investors’ confidence.” Kim said investors’ frustration will be eased should the company shows better-than-expected performance in the third quarter that ended September. Hyundai Motor plans to release its third quarter earnings report on Oct. 23 and Kia and Mobis on Oct. 24. Lee Ha-won, a Hyundai Motor spokesman, said it’s too early to say about how much dividend will be paid to shareholders. “I will be decided after taking into account the firm’s performance throughout the year,” Lee said. Heo said the three firms hold enough cash to fund the deal, and therefore the controversial deal won’t have a negative impact on credit ratings of the companies involved. Moody’s, an international credit rating agency, recently affirmed the “Baa1” issuer ratings of Hyundai, Kia and Mobis, maintaining the outlook for the ratings at “stable.” Standard & Poor also confirmed the long-term corporate credit ratings of the three companies at “BBB-plus,” saying that the ratings would not be affected by the land purchase due to “large cash reserves and robust operating cash flows.” “The Hyundai Motor group’s strong balance sheets _ with each of the three companies’ significant cash holdings and robust free cash flow-generating abilities _ will enable it to fund this sizeable transaction without any material stress on their financial profiles,” Chris Park, a senior vice president at Moody’s in Hong Kong, was quoted as saying by Chinese state media Xinhua on Sept. 19.
Posted on: Sun, 19 Oct 2014 08:01:00 +0000
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