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Hyundai Motor ix25 launch in China to sustain solid growth

April 21, 2014 14:10|April 21, 2014 14:10
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▶ On April 20, Hyundai Motor (Hyundai) unveiled the ix25 compact SUV at the Beijing Motor Show. This will be Hyundai’s second model exclusively developed for China, and it will launch locally in October. The first China-specific model, Mistra, launched in November, and is selling well. Specifically, the Mistra D1 segment sedan has sold 46,866 units since its release.
As such, we believe Hyundai’s strong China momentum will be sustainable, given the surging popularity of SUVs in China and the still high growth potential.

▶ China’s SUV market jumped another 37.1% YoY to 868.4K units in 1Q14, after surging 49.4% YoY to 2.99mn in 2013. Even with the torrid growth, the SUV weighting to total passenger car sales is only 17.8% in 1Q14, well below Korea’s 28.7% and
the US’ 34.6%. In addition, China’s three top-selling SUVs, namely the Great Wall Haval H6, VW Tiguan and Honda CR-V, are all compacts.

▶ We maintain BUY and a 12M TP of W320,000 at 10x 12MF PE, a 10% premium to the trailing average.
*Source: Korea Investment & Securities Co.