Kia (000270.KS) rose more than 4% in early trading Tuesday, buoyed by a brokerage target price increase. The gain is attributed to analysis that improved earnings expectations for the second half, driven by expanding eco-friendly vehicle sales centered on electric vehicles (EVs) and hybrids (HEVs), stimulated investor sentiment.
According to the Korea Exchange, Kia was trading at 160,100 won as of 9:40 a.m., up 6,400 won, or 4.16%, from the previous session.
LS Securities maintained its "Buy" rating on Kia and raised its target price to 240,000 won from the previous 230,000 won. The move reflects higher sales projections and the impact of a stronger dollar, which lifted the firm's earnings estimates.
LS Securities forecast Kia's second-quarter revenue at 32.4 trillion won and operating profit at 2.7 trillion won. While operating profit would decline slightly from the same period last year, the firm assessed it as in line with market consensus.
For the second half, the firm expects expanding eco-friendly vehicle sales to support earnings. In Korea, EV sales are rising, boosted by the new-car effect from models such as the EV3 and EV5 and expanded EV subsidies, while EV sales in Europe continue to recover. Hybrid sales are also showing solid growth, which is expected to contribute to an improved product mix.
The firm also cited the North American market as a positive factor. LS Securities expects profitability to improve further with the launch of the second-generation Telluride hybrid. It estimated that achieving the Telluride sales target of 180,000 units would generate a profit improvement of about 900 billion won.
"Earnings growth from expanding eco-friendly vehicle sales will continue, centered on North America and Europe," said Lee Byung-geun, a researcher at LS Securities. "The current share price, at 6.1 times the 12-month forward price-to-earnings ratio (PER), is below the global automaker average of 7.3 times, making it a bargain buying opportunity." He added, "Kia's investment value will also come into focus as the group expands its robotics business."
