Investment highlights
2Q19 operating profit beat the consensus estimate by 7%, coming in at KRW1.24tn (+30% YoY, 4.6% operating margin). Favorable FX movements combined with an improving product mix helped offset cost hikes and the earnings decline in financials and others. North American market share rose on launch of new SUVs Telluride and Venue. Improving earnings fundamentals underscored by reduced fleet sales volume and lower incentives should accelerate earnings recovery. Healthier sales are expected to boost Hyundai Capital America’s earnings as well. We maintain BUY and our target price of KRW185,000. Lowering expectations because of