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4Q24 earnings beat consensus; detailed shareholder return measures announced

Positive outlook for earnings, shareholder returns, and orders

We raise our target price for Hyundai Mobis to W350,000 (from W330,000), as we revised up our 2025F EPS to reflect positive ASP effects (for both the module/core parts and A/S divisions) and favorable FX (A/S division). We also note positive expectations surrounding shareholder returns (with buybacks scheduled from February) and the GM-Hyundai Motor partnership. However, for the module/core parts division, it will be important to monitor the sustainability of profitability, as the company will likely shift back to booking settlement expenses (rather than settlement gains) in 1H25. Nevertheless, the division should continue to benefit from positive ASP effects.

4Q24 review: OP beats consensus by 24%; module/core parts remains profitable

For 4Q24, Hyundai Mobis delivered strong results, with operating profit of W986.1bn (+89% YoY; above the consensus of W797bn), revenue of W14.7tr (flat YoY; in line with the consensus of W14.6tr), and OP margin of 6.7% (+3.1%p YoY, +0.2%p QoQ). Module/core parts operating profit was W174bn (remaining in the black QoQ, +W243bn YoY); while start-up expenses at the new US plant had a negative impact (-W60bn), positive factors included: 1) ASP/mix effects (+W70bn); and 2) cost recovery from finished carmakers (+W240bn; W120-130bn in settlement gains and the remainder linked to R&D and production-related costs). In 3Q24, the division also recognized settlement gains of about W66bn (related to logistics/molding expenses booked in 1H). In the automation segment, advanced manufacturing production credit (AMPC) recognition amounted to around W5bn in 4Q24; based on planned production volumes, we expect this figure to reach approximately W150bn to W200bn in 2025.

The A/S division maintained strong profitability in 4Q24 (OP margin of 26%; +4.7%p YoY, -0.7%p QoQ). The division’s operating profit increased by around W219.7bn YoY, boosted by: 1) ASP growth following new model releases (+W40bn); 2) volume growth (+W90-100bn); 3) FX effects (+W50bn); and 4) other factors (+W40bn). Meanwhile, full-year core parts orders from non-captive customers amounted to US$2.56bn, reaching only 27.5% of the firm’s target (US$9.33bn). This shortfall was mainly caused by delays in a large-scale project; while the firm did not include this project in its 2025 order target (US$7.45bn), we see potential for significant order growth if it materializes.

During its CEO Investor Day in Nov. 2024, Hyundai Mobis outlined its shareholder return policy, setting a shareholder return target (dividends + buybacks) of over 30%. The company has now followed up with details, announcing plans to conduct two rounds of share buybacks in 2025. The first round (to be discussed at the board meeting in February) will likely be twice the size of the 2024 buyback (W163bn). The second round will be carried out in 2H25, along with the retirement of shares repurchased earlier. After 2025 earnings are confirmed (likely in Feb. 2026), the firm could make additional adjustments to meet its shareholder return target.






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