20171130-三星证券-All_eyes_on_xEV_technology_13页_995kb

Hyundai Mobis Summary

Core Content

Hyundai Mobis is a key supplier of core components for xEV (exclusively electric vehicles) within the Hyundai Motor Group (HMG), and the company is positioned to benefit significantly from the growing xEV market. The firm is expected to see substantial growth in xEV-related sales and profitability as HMC and Kia expand their electric vehicle offerings.

Main Viewpoints

• xEV Growth:
  Hyundai Mobis is expected to see its xEV core parts sales rise from KRW620 billion in 2016 to KRW1 trillion in 2018, with further growth to KRW4.7 trillion in 2020. This growth is driven by HMC and Kia's plans to launch numerous xEV models, including the Kona EV, Niro EV, Soul EV, and FCEV (Fuel Cell Electric Vehicle), targeting a total of 31 xEV models by 2020.

• Market Position:
  Mobis is the exclusive supplier of battery packs, BMS, power control, and traction motors for HMC and Kia's xEVs, giving it a competitive edge in the growing xEV supply chain. The firm's exclusive role in the xEV market is a premium factor, as it allows it to benefit from the expansion of xEV production.

• Sales and Profitability:
  Mobis is expected to achieve a CAGR of 65% in xEV parts sales through 2020. Its aftermarket parts business has shown steady profitability, with margins rising from 23.2% in 4Q16 to 25.2% in 3Q17. The company is also diversifying its client base, with overseas OEM orders contributing to sales growth and reducing dependency on HMG.

• Operating Margin:
  The operating margin for xEV core parts is expected to rise from 2.2% in 2017 to 4-5% by 2020 as the company's China plant and green-car parts business become more profitable.

• Strategic Initiatives:
  Mobis is expanding its production capacity in the Czech Republic and China, and its India plant is set to begin operations in 2019. These expansions support its growing xEV business and help diversify its operations beyond HMG.

Key Information

• Current Price: KRW263,500
• Target Price: KRW330,000 (25.2% upside)
• Market Cap: KRW25.7 trillion / USD23.9 billion
• Shares (float): 97,343,863 (67.1%)
• 52-Week High/Low: KRW283,000 / KRW213,500
• Avg Daily Trading Value (60-day): KRW52.6 billion / USD48.8 million

Financial Highlights

Growth Momentum

• xEV Sales Forecast (2017E–2020E):
  HMC and Kia are expected to sell 224,000 xEVs in 2017, rising to 703,000 in 2020.

  • HEV: 186,000 → 450,000
  • PHEV: 12,000 → 60,000
  • EV: 26,000 → 163,000
  • FCEV: 0 → 30,000

• Module Sales Growth:
  Module sales are expected to grow at a CAGR of 12% from 2017 to 2020, reaching KRW41.3 billion in 2020. This is supported by the increasing adoption of xEVs and the integration of modules into CBU (completely built unit) production lines.

• Core Parts Sales:
  Core parts sales are expected to reach KRW18.4 billion in 2020, with a CAGR of 2% from 2017 onwards.

• Green Car/ADAS Portion:
  The green car and ADAS portion of sales is expected to increase from 4% in 2017 to 32.4% in 2020, reflecting the company's strategic focus on eco-friendly technologies.

Recommendation

• Current Recommendation: BUY
• Target Price: KRW330,000
• Rating: 4.0 (on a scale of 5)

Conclusion

Hyundai Mobis is well-positioned to capitalize on the growing xEV market, with its exclusive supplier role, strategic diversification, and strong growth in green car and module sales. Despite some short-term challenges, such as declining module margins, the company is expected to improve profitability as its operations expand and the xEV market continues to grow. The stock is presented as a top sector pick for 2018.