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Asia Stocks to Watch
News and commentary about the Asian stocks you need to know about today
June 2, 2015, 10:04 P.M. ET
Hyundai Motor Dips To A Crisis Level, While Honda Surges Ahead
By Shuli Ren
Hyundai Motor (005380.Korea) fell another 2.9% this morning after slumping 9.4% yesterday.
Investors are throwing in the towel. Hyundai is now trading at only 0.58 times book, near the 2008 global crisis low of 0.56 times, even though its return on equity is estimated at 11% versus 7.5% in 2008.
Triggering the sell-off is Hyundai’s announcement that its global retail sales last month fell 6% from a year ago.
The decline was broad-based. Shipments in the US fell 10% year-on-year, while General Motors (GM) reported a 3% increase and Ford Motor (F) posted a small 1.3% drop.
In China, Hyundai’s shipment dipped 9%.
Even in its domestic market, Hyundai did poorly, reporting a 8% drop.
Adding fuel to the fire, Honda Motor (HMC) this morning booked a 32% surge in China sales in May. Its US car sales rose 1.3%. Shares of Honda rose 1.6% in Tokyo. Toyota Motor (TM) fell 0.3%.
You can blame the stronger won versus yen, or the weak global demand, but Goldman Sachs thinks Hyundai has not spent enough on research and development, which means its cars are old and tired. See my yesterday’s blog “Hyundai Motor Falls To Four-Year Low: Why Is Korean Auto Such A Failure?“.
UBS this morning gave the entire list of factors that contributed to Hyundai’s nightmare May statistics, the most notable is its low exposure to SUVs (SUV is the only bright spot in China right now):
Hyundai’s May global retail volume (tentative) came in very weak, down 6% YoY, in our estimate, well below Hyundai’s annual target of +2%. Reasons for weak sales are: 1) low exposure to SUVs (only 20% of global volume) in a time when SUV segment is gaining market share globally. 2) New Tucson SUV is selling well, but is in a supply shortage. 3) Hyundai is losing competitiveness to local OEMs in China that are rapidly gaining market share with SUVs with lower prices yet improved quality (c25- 30% cheaper than Hyundai’s). 4) Hyundai is not aggressive vs Japanese in the US given the JPY weakness. 5) Demand plunged 20-40% YoY year to date in Russia, CIS, Brazil and Latam, which comprise about 12% of Hyundai’s global volume. Also, FX remains the key headwind, affecting volume negatively – On a YoY basis, KRW has been stronger to JPY, Euro, Russia ruble and Brazil real YTD.
Competition has always been intense among global auto makers, and now we have an anemic global demand with China slowing. Hyundai is looking increasingly like a loser.
News and commentary about the Asian stocks you need to know about today
June 2, 2015, 10:04 P.M. ET
Hyundai Motor Dips To A Crisis Level, While Honda Surges Ahead
By Shuli Ren
Hyundai Motor (005380.Korea) fell another 2.9% this morning after slumping 9.4% yesterday.
Investors are throwing in the towel. Hyundai is now trading at only 0.58 times book, near the 2008 global crisis low of 0.56 times, even though its return on equity is estimated at 11% versus 7.5% in 2008.
Triggering the sell-off is Hyundai’s announcement that its global retail sales last month fell 6% from a year ago.
The decline was broad-based. Shipments in the US fell 10% year-on-year, while General Motors (GM) reported a 3% increase and Ford Motor (F) posted a small 1.3% drop.
In China, Hyundai’s shipment dipped 9%.
Even in its domestic market, Hyundai did poorly, reporting a 8% drop.
Adding fuel to the fire, Honda Motor (HMC) this morning booked a 32% surge in China sales in May. Its US car sales rose 1.3%. Shares of Honda rose 1.6% in Tokyo. Toyota Motor (TM) fell 0.3%.
You can blame the stronger won versus yen, or the weak global demand, but Goldman Sachs thinks Hyundai has not spent enough on research and development, which means its cars are old and tired. See my yesterday’s blog “Hyundai Motor Falls To Four-Year Low: Why Is Korean Auto Such A Failure?“.
UBS this morning gave the entire list of factors that contributed to Hyundai’s nightmare May statistics, the most notable is its low exposure to SUVs (SUV is the only bright spot in China right now):
Hyundai’s May global retail volume (tentative) came in very weak, down 6% YoY, in our estimate, well below Hyundai’s annual target of +2%. Reasons for weak sales are: 1) low exposure to SUVs (only 20% of global volume) in a time when SUV segment is gaining market share globally. 2) New Tucson SUV is selling well, but is in a supply shortage. 3) Hyundai is losing competitiveness to local OEMs in China that are rapidly gaining market share with SUVs with lower prices yet improved quality (c25- 30% cheaper than Hyundai’s). 4) Hyundai is not aggressive vs Japanese in the US given the JPY weakness. 5) Demand plunged 20-40% YoY year to date in Russia, CIS, Brazil and Latam, which comprise about 12% of Hyundai’s global volume. Also, FX remains the key headwind, affecting volume negatively – On a YoY basis, KRW has been stronger to JPY, Euro, Russia ruble and Brazil real YTD.
Competition has always been intense among global auto makers, and now we have an anemic global demand with China slowing. Hyundai is looking increasingly like a loser.
