Hyundai Motor Co Net Debt / EBITDA surged on 2.6x from 7.8x to 10.4x in 2018 and Revenue showed almost no change
24 Jan 2019 • About Hyundai Motor Co (
$HYUD) • By InTwits
Hyundai Motor Co reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 6.4% in 2018 vs. 8.4% in 2017 vs. 11.3% in 2014
- Hyundai Motor Co has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.5%. At the same time it's in pair with industry average of 5.9%
- CAPEX is quite volatile: 3,226,486 KRWm in 2018, 3,055,023 KRWm in 2017, 2,971,161 KRWm in 2016, 8,141,729 KRWm in 2015, 3,353,809 KRWm in 2014
- The company has potentially unprofitable business model: ROIC is 1.6%
- It operates with high leverage: Net Debt/EBITDA is 10.4x while industry average is 16.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Hyundai Motor Co's Revenue showed almost no change in 2018. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.0 pp from 8.4% to 6.4% in 2018. EBITDA Margin followed a declining trend at -1.1 pp per annum in 2014-2018.
Gross Margin decreased on 2.6 pp from 18.2% to 15.6% in 2018. Gross Margin declined at -1.3 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2018.
Net Income margin decreased on 2.6 pp from 4.2% to 1.6% in 2018. Net Income margin stuck to a declining trend at -1.6 pp per annum in 2014-2018. The efficient tax rate was 37.0% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 3.3% in 2018. Hyundai Motor Co showed decline in CAPEX/Revenue of 5.5 pp from 8.9% in 2015 to 3.3% in 2018. It's average CAPEX/Revenue for the last three years was 3.2%. Hyundai Motor Co maintained rich investment policy and has spent a big chunk of EBITDA (52.3%) to CAPEX.
Return on investment
The company operates at low ROIC (1.6%) and ROE (1.7%). ROIC decreased slightly on 1.4 pp from 3.1% to 1.6% in 2018. ROE decreased on 2.9 pp from 4.6% to 1.7% in 2018. ROIC declined at -1.2 pp per annum in 2014-2018. ROE declined at -2.1 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 10.4x and Debt / EBITDA is 11.9x. Net Debt / EBITDA surged on 2.6x from 7.8x to 10.4x in 2018. Debt increased slightly on 1.8% while cash increased on 3.3%. Net Debt/EBITDA followed a growing trend at 1.3x per annum in the last 5 years.
Hyundai Motor Co has good short term financial stability: Interest coverage ratio (ICR) is 7.9x. Hyundai Motor Co has short term refinancing risk: cash is only 34.6% of short term debt.
Average interest expence charged on company's debt was 0.42% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 10.4x and P/E 0.0x.
The company paid 74.8% of Net Income as dividends in 2018.
Management team
Chung Mong-Koo is a Hyundai Motor Co's CEO. Chung Mong-Koo has spent 2 years with the company. CEO total compensation was 2,147,483,647 KRW in 2018 which included 2,147,483,647 KRW salary.
Financial and operational results
FY ended 31 Dec 2018
Hyundai Motor Co ($HYUD) key annual financial indicators| mln. KRW | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 89,256,319 | 91,958,736 | 93,649,024 | 96,376,079 | 96,812,609 | 0.5% |
| Gross Profit | 19,130,043 | 18,257,440 | 17,689,304 | 17,577,907 | 15,142,130 | -13.9% |
| SG&A | 10,787,342 | 10,970,254 | 11,476,616 | 11,963,980 | 11,594,362 | -3.1% |
| EBITDA | 10,099,883 | 9,151,940 | 8,552,326 | 8,104,061 | 6,172,842 | -23.8% |
| EBIT | | | | | 2,422,165 | |
| Interest expence | | | | | 307,070 | |
| Tax | | | | | 884,563 | |
| Net Income | 7,346,810 | 6,417,300 | 5,406,440 | 4,032,820 | 1,508,080 | -62.6% |
Balance Sheet
|
|---|
| Cash | 7,096,513 | 7,331,463 | 7,890,089 | 8,821,529 | 9,113,625 | 3.3% |
| Inventory | | | | | 10,714,858 | |
| Accounts Payable | | | | | 7,655,630 | |
| Short Term Debt | 16,534,144 | 20,172,928 | 23,597,645 | 23,058,201 | 26,354,777 | 14.3% |
| Long Term Debt | 37,733,259 | 44,760,126 | 49,846,375 | 48,942,329 | 46,941,364 | -4.1% |
Cash flow
|
|---|
| Capex | 3,353,809 | 8,141,729 | 2,971,161 | 3,055,023 | 3,226,486 | 5.6% |
| Dividends | | | | | 1,127,452 | |
Ratios
|
|---|
| Revenue growth | 2.2% | 3.0% | 1.8% | 2.9% | 0.5% | |
| EBITDA growth | -7.1% | -9.4% | -6.6% | -5.2% | -23.8% | |
|
|---|
| Gross Margin | 21.4% | 19.9% | 18.9% | 18.2% | 15.6% | -2.6% |
| EBITDA Margin | 11.3% | 10.0% | 9.1% | 8.4% | 6.4% | -2.0% |
| EBIT Margin | | | | | 2.5% |
| SG&A, % of revenue | 12.1% | 11.9% | 12.3% | 12.4% | 12.0% | -0.4% |
| Net Income Margin | 8.2% | 7.0% | 5.8% | 4.2% | 1.6% | -2.6% |
| CAPEX, % of revenue | 3.8% | 8.9% | 3.2% | 3.2% | 3.3% | 0.2% |
|
|---|
| ROIC | 6.6% | 4.9% | 3.6% | 3.1% | 1.6% | -1.4% |
| ROE | 10.4% | 8.3% | 6.5% | 4.6% | 1.7% | -2.9% |
| Net Debt/EBITDA | 4.7x | 6.3x | 7.7x | 7.8x | 10.4x | 2.6x |
| Interest coverage ratio (ICR) | | | | | 7.9x |
| Interest expence / Average debt | | | | | 0.4% | |
Peers in Automobiles & Parts
Below you can find Hyundai Motor Co benchmarking vs. other companies in Automobiles & Parts industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kumho Tire Co Inc ($KHTC) | -7.0% | -11.6% | -3.1% | -2.4% | |
| Toyota Motor Corp ($TYT) | | 6.0% | 4.3% | -2.8% | 6.5% |
| |
|---|
| Median (2 companies) | -7.0% | -2.8% | 0.6% | -2.6% | 6.5% |
|---|
| Hyundai Motor Co ($HYUD) | | 3.0% | 1.8% | 2.9% | 0.5% |
Top companies by Gross margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | 19.0% | 19.8% | 20.4% | 17.6% | 18.7% |
| Kumho Tire Co Inc ($KHTC) | 29.4% | 25.5% | 25.3% | 16.0% | |
| |
|---|
| Median (2 companies) | 24.2% | 22.7% | 22.9% | 16.8% | 18.7% |
|---|
| Hyundai Motor Co ($HYUD) | 21.4% | 19.9% | 18.9% | 18.2% | 15.6% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | 13.8% | 15.3% | 15.8% | 13.1% | 14.1% |
| Kumho Tire Co Inc ($KHTC) | 15.8% | 11.2% | 11.7% | 2.2% | |
| |
|---|
| Median (2 companies) | 14.8% | 13.2% | 13.7% | 7.7% | 14.1% |
|---|
| Hyundai Motor Co ($HYUD) | 11.3% | 10.0% | 9.1% | 8.4% | 6.4% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kumho Tire Co Inc ($KHTC) | 8.2% | 22.2% | 12.4% | 10.1% | |
| Toyota Motor Corp ($TYT) | 3.8% | 4.2% | 4.5% | 4.4% | 4.4% |
| |
|---|
| Median (2 companies) | 6.0% | 13.2% | 8.5% | 7.3% | 4.4% |
|---|
| Hyundai Motor Co ($HYUD) | 3.8% | 8.9% | 3.2% | 3.2% | 3.3% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Toyota Motor Corp ($TYT) | 7.3% | 7.5% | 7.3% | 5.1% | 6.0% |
| Kumho Tire Co Inc ($KHTC) | 9.7% | 3.6% | 3.1% | -4.5% | |
| |
|---|
| Median (2 companies) | 8.5% | 5.5% | 5.2% | 0.3% | 6.0% |
|---|
| Hyundai Motor Co ($HYUD) | 6.6% | 4.9% | 3.6% | 3.1% | 1.6% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kumho Tire Co Inc ($KHTC) | 4.1x | 7.4x | 7.5x | 34.8x | |
| Toyota Motor Corp ($TYT) | 4.0x | 4.0x | 3.4x | 4.5x | 3.9x |
| |
|---|
| Median (2 companies) | 4.1x | 5.7x | 5.4x | 19.7x | 3.9x |
|---|
| Hyundai Motor Co ($HYUD) | 4.7x | 6.3x | 7.7x | 7.8x | 10.4x |
