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Earnings set to improve in 2026; beneficiary of robotics/SDV/robotaxi themes

MobED sales, Boston Dynamics stake, and SDV/robotaxi businesses in focus

Shares of Hyundai Motor (HMC) have gained 38% YTD, significantly outperforming the broader market (+12%). With Hyundai Motor Group (HMG) having unveiled its robotics strategy (timelines for the full-scale production and deployment of Atlas, collaboration with Google DeepMind, etc.), HMC’s stock has begun to price in the value of its stake in Boston Dynamics. In another positive development, HMG appointed a new advanced vehicle platform (AVP) division head with prior experience at Nvidia and Tesla. As a result, the stock’s 12-month forward P/E has expanded to 8.5x (from 6.1x at end-2025), now exceeding the global peer average of 8x. We maintain our Buy rating.

The robotics business is set to gain traction, with HMG planning to open the Robot Metaplant Application Center (RMAC) this year and deploy Atlas at its software-defined factories (SDFs) in 2028. The group also plans to establish a robot production system with annual capacity of 30,000 units by 2028. In addition, the robotic mobility platform MobED (developed by HMG’s Robotics LAB) is set to begin full-fledged sales in 1H26, contributing to HMC’s revenue. Expectations for a Boston Dynamics IPO are also likely to build, bringing attention to HMC’s 27% stake; assuming an IPO valuation at W26?62tr based on a 2028F enterprise value, HMC’s stake would be worth roughly W8?17tr.

In autonomous driving and robotaxis, we expect the software-defined vehicle (SDV) business to accelerate meaningfully now that an AVP division head has been appointed. In 3Q26, an SDV prototype (“Pace Car” project) is set to be showcased. Plans for GPU utilization (data centers, etc.) also warrant attention. We lift our target price on HMC to W520,000 (from W360,000), as we revised up our 2026F target P/E to 10.7x (from 7.4x). Given the increasing visibility on robotics, autonomous driving, and robotaxi initiatives together with the upward trend in US market share, we applied the CY2026F multiple of Toyota, which trades at the highest valuation among global legacy automakers.

4Q25 preview: Key variable is extent of tariff offset; 2026 earnings set to improve

For 4Q25, we expect HMC to report revenue of W48.5tr (+4.0% YoY) and operating profit of W2.46tr (-13%; below consensus of W2.67tr). Wholesale volume declined to 1.03mn units (-3.1% YoY; -6.7% YoY excluding China), led by a 12% YoY drop in Europe. The key point to watch in the 4Q25 report is the extent to which contingency measures offset the tariff impact. In 2Q-3Q25, tariffs had a cumulative profit impact of roughly -W2.6tr, of which we estimate around W1.1tr (40%) was offset. While results may fall short of expectations, the scale of share buybacks and 2026 guidance are more important.

We forecast 2026 revenue at W200tr (+6.5%YoY) and operating profit at W14tr (+15%), with the latter returning to growth and exceeding the consensus (W13.5tr). Tariff impacts are unlikely to worsen in 2026, and US market share has entered an upward trajectory. We forecast HMG’s US market share to rise to 13.7% by 2027 (vs. 10.6% in 2024), with each 1%p gain estimated to add over W1tr to operating profit.