Kia overtook Hyundai Motor Company in market value for the first time since Hyundai acquired Kia in 2000. Hyundai, South Korea’s largest carmaker, owns a 34% stake in Kia, the country’s second-largest carmaker.
Analysts say investors favor Kia over Hyundai for its attractive shareholder return policies, including higher dividend payouts. Kia’s focus on popular sport utility vehicles (SUVs) is also perceived as having more potential for short-term stock price growth.
Kia’s market capitalization reached $31 billion (41.37 trillion won) as its shares rose 5% to $77 (102,900 won) on Jan. 31. Shares in Hyundai rose 2.42% to 194,600 won on the same day, resulting in a market value of 41.16 trillion won.
Kia’s stock price has been trending upward since the beginning of the year. Kia started as eighth in market value in early January but surpassed both POSCO Holdings and Hyundai Motor, rising to the sixth spot by the end of the month.
Analysts attribute Kia’s rise to its shareholder return policy. Hyundai and Kia announced dividends of 8,400 won and 5,600 won, respectively, during their earnings announcement on Jan. 25. Based on both company’s share prices on that day, Kia’s dividend yield - how much a company pays out in dividends each year relative to its stock price - was 6%, higher than Hyundai’s 4.5%. Kia also announced a 500 billion won share buyback plan, while Hyundai reaffirmed its previous share retirement plan.
Although both carmakers posted record sales and profits last year, analysts note that differing strategies have influenced stock performance. Hyundai plans to focus on mid- to long-term goals such as electric vehicles, hydrogen vehicles, and software-defined vehicles (SDVs).
On the other hand, Kia is capitalizing on the current popularity of SUVs and gearing up for mass production of its purpose-built vehicles (PBVs) at its Hwaseong plant in Gyeonggi Province next year.
