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Holly LaFon
Holly LaFon
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Francisco Parames' Cobas Asset Management Comments on Hyundai Motor

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February 06, 2019 | About:

This month, we would like to share some ideas on Hyundai Motor (XKRX:001500), South Korea's largest automaker (between four and five million cars worldwide a year) and the world's fifth-largest including KIA, in which Hyundai Motor Group has a stake.

Our investment in Hyundai is through preference shares.

The company has been slow to address growing global demand for SUVs (light off-road). Emerging market currency depreciation and geopolitical issues (THAAD) are also behind the company's underperformance relative to peers over the past few years.

However, Hyundai has launched new SUV models, such as the "powertrain” in mid-2018. Moreover, the company appears to be undergoing major changes in its leadership, which is passing on to the son of the group's founders, the Chung family. Corporate governance is clearly improving. Indeed, a share buyback and cancellation of treasury shares has been announced for 2018. The company is expected to undo its circular structure in 2019.

This, coupled with growing activism, could shore up the share price, which has recently dipped to 12-month lows.

The group founders, the Chung family, capable of transforming the company from being just another Korean automaker to being a global automaker.

Therefore, we consider Hyundai to be an appealing investment opportunity: at the end of September 2018, it had a weight of 2.6% in Cobas Selección FI; 2.8% in Cobas Internacional FI; 2.9% in Cobas Grandes Compañías FI; and 0.5% in Cobas Renta FI.

From Cobas Asset Management's January 2019 newsletter.

About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

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