Bernstein on Hyundai Motor (005380.KS): Defense-Linked Affiliates in Focus — Incremental Upside via Equity Stakes
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Bernstein reiterates Outperform on Hyundai Motor (005380.KS) with a KRW 570,000 target price versus the KRW 362,000 close on September 16, 2026, and spotlights a market-overlooked angle: group defense exposure through equity holdings. Hyundai Motor Group participates in Korea's defense value chain via Hyundai Rotem (not covered), Hyundai Wia (not covered) and Kia, in an industry whose average revenue compounded at 20% and average operating profit at 48% over 2021–25 on rising defense budgets and exports. Defense generates about 95% of Rotem's FY12/25 operating profit, yet Rotem trades below Asian defense peers; as its 33.8% largest shareholder, Hyundai Motor would be the primary listed beneficiary if Rotem's valuation converges—an upside scenario rather than a core pillar. The core thesis remains the auto business plus Boston Dynamics robotics optionality. Defense is financially immaterial at Wia (5% of FY12/25 revenue, auto parts 92%, special-segment margins around 1–2% despite segment revenue rising from KRW 195bn to KRW 393bn) and Kia (military vehicles roughly 0.15% of total volume). Korean media report Wia may sell its special business to Rotem, pending company confirmation. Reported EPS forecasts are KRW 36,088/45,675/59,417 for F25E/F26E/F27E (P/E 10.0x/7.9x on F25E/F26E); the 12-month rating carries no target-price timetable or quantified consolidation upside.
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