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South Koreas biggest car manufacturer – Hyundai Motor Co. and its affiliate Kia Motors Corp. announced that they are planning to buy back a combined KRW670 billion ($616 million) of stock. The buyback comes as the latest attempt to ease investors agitation following the $10-billion purchase of a property in Seoul slated for new headquarters.

As reported by Bloomberg, Hyundai and Kia announced that the buybacks are to be finalized by February 11th in order to “stabilize share prices and improve shareholder value”.

According to separate regulatory filings posted by both Hyundai and Kia on Tuesday, Hyundai is planning to buy back a total of 2.2 million common and 652 019 preferred shares at Mondays closing prices. Kia, on the other hand, will repurchase 4.05 million common shares.

Another affiliate of the South Korean company – Hyundai Mobis Co. – revealed that it has no intentions of buying back shares. Hyundai and Kia together rank fifth among global auto makers by sales.

One of the analysts, who work at Korea Investment & Securities – Seo Sung-moon commented for the Financial Times that Hyundais share price “has fallen since the land deal, and it seems the company has recognized that as a problem. So it wanted to repair the damage”.

Hyundai also revealed that it has set a target of boosting its dividend over the next year. The company also seeks to institute an interim payout. The dividend of the South-Korean car manufacturer last year was estimated to 6.3% of profit attributable to shareholders, or about half of the South Korean average.

The buybacks were pursued by the companys affiliates after the countrys government announced that it intends to increase local taxes on cash-hoarding companies, unless more money is spent by them on wages, dividends and other investments, including land acquisitions. The deal was approved by the boards of the three affiliates.

Bookook Securities analyst Ahn Jong-hoon said for the Wall Street Journal: “This is a positive, investor-friendly move. The auto makers are now intent on raising their battered share prices by announcing a series of measures to boost shareholder value. They’re also expected to offer higher dividends.”

Hyundai Motor Co. settled 5.71% higher on Tuesday in Seoul at KRW176 000 and was unchanged on Wednesday. Shares slid 0.83% to €47.40 in Frankfurt by 08:21 GMT today. The company is valued at KRW 36.68 trillion.

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