Contrarian Corpus
activist full deck initial thesis
2018-04-23 · 43 pages

Hyundai Motor Group (Hyundai Mobis, Hyundai Motor Company, Kia Motors) 012330.KS / 005380.KS / 000270.KS

N 5 Narrative
V 4 Visual
C 4 Craft
Original source ↗

The three reasons

  1. 1

    Mobis, HMC and Kia trade at 57%, 26% and 73% EV/EBITDA discounts to global peers — peers re-rate if structure is fixed

  2. 2

    HMG's plan leaks KRW 1.7bn US$ of avoidable tax value (7% of Mobis market cap) by skipping a real holdco

  3. 3

    Mobis and HMC sit on KRW 6tn of excess cash each while Kia is under-capitalized — capital is trapped

Primary demands

  • Recast the HMG Restructuring Plan into a true holding company structure: merge Mobis with HMC into 'Hyundai Mergeco', then demerge into Hyundai Motor Holdco and Hyundai Motor Opco
  • Return up to KRW 6.0 trillion of excess cash at each of Mobis and HMC and cancel all existing and future treasury shares
  • Commit to a clear dividend policy paying 40-50% of net income in cash dividends plus buybacks across Mobis, HMC and Kia
  • Add 3 independent directors with international/sector-diverse backgrounds at each board and amend articles of incorporation to strengthen governance
  • Ensure a transparent process and fair value realization for Kia's stake in Mobis

KPIs cited

Mobis EV/EBITDA discount to peers
2.8x forward vs peers 6.5x — 57% discount; ex-cash P/E 51% discount
HMC EV/EBITDA discount to peers
2.0x forward — 26% discount; ex-cash P/E 24% discount
Kia EV/EBITDA discount to peers
0.7x forward — 73% discount; ex-cash P/E 63% discount
Tax leakage NPV under HMG plan
KRW 1.8tn (~US$1.7bn) PV on HMC/Kia dividends — 7% of pre-announcement Mobis market cap
HMC excess cash
Net cash KRW 16.5tn = 17.5% of assets vs peers' 11.1%; ~KRW 6.0tn excess (18% of market cap)
Mobis excess cash
Net cash 14.3% of assets vs peers -9.0%; ~KRW 6.0tn excess (26% of market cap)
5-year relative total shareholder return vs peers
Mobis -169%, HMC -76%, Kia -105%
Implied P/E of Mobis spun-off A/S business in Glovis merger
8.5x FY17 vs 16.4x for remaining Mobis, despite 24% ROE (spun-off) vs 10% (remaining)
Board independence
HMC 44% / Kia 33% / Mobis 33% independent directors vs Daimler 100%, GM 90%, Ford 79%; all-Korean, no gender diversity
Dividend payout ratio (2017)
Mobis 21%, HMC 25%, Kia 17% of net income — 19-34pts below global auto peers
Pro forma OP margin from Mobis-HMC merger
27% uplift to 6.8% pro forma — in line with 6.8% peer average
Share-price reaction to HMG restructuring announcement
Mobis -8.4%, HMC -5.3%, Kia -6.1% in the two days post-announcement
HMG global market share
Doubled from 4% to 8% (2001-2017) at 7% unit-sales CAGR; 4th-largest OEM
Mobis A/S operating margin
Consistently >25% — the division being handed to Glovis at a discount

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (6)

Notes

First public Elliott presentation on Hyundai Motor Group — the 'Accelerate Hyundai' campaign (acceleratehyundai.com), companion to a separately filed Letter. Tone is unusually collaborative for an Elliott deck: opens by 'welcoming' HMG's own 28-March-2018 restructuring initiative before arguing it is suboptimal, then proposes a 4-step alternative (Merger / Demerger / Tender / Optimization). Cites Elliott's 2016 Samsung Electronics Value Enhancement campaign as a Korean-market track-record proof point. Uses third-party validation as a substitute for a CEO-contradiction device — page 20 stacks Reuters / FT / Morgan Stanley / JPM / Breakingviews quotes that echo Elliott's critique of the Glovis merger. No named villain: critique stays institutional/structural rather than attacking the Chung founding family by name. Peer-gap visuals are the visual spine (pages 24-29 form a 6-slide TSR/multiples gap sequence). Cover date derived from 20-April-2018 data cutoff in disclaimer plus 4/19/2018 chart x-axis; filename is 'April 2018' with no day. Campaign withdrawn at 29-May-2018 Mobis EGM when HMG pulled the spin-off vote — outcome left as 'unknown' here for downstream classification.