Hyundai Motor Co., the biggest car manufacturer in South Korea, earned wide condemnation, reflected heavily in the stock, last week, by spending almost $10bn on a real estate asset, set to become its new HQ. The price tag was about three times the perceived value of the property, and the move drew heavy criticism from almost all interested parties.
In the latest development, Hyundai workers will be holding a partial strike through September 26th to protest the excessive spending. Tens of thousands of workers walked out for 4 hours today, and plan further and tougher measures.
“The unions’ announcements triggered concerns that the strikes at Hyundai and Kia may take longer than expected,” Kwon Soon Woo, an analyst at HI Investment & Securities Co., said for Bloomberg. “This will lead to an increase in lost production which may hurt the companies’ third quarter earnings.”
The unions declared Hyundai, and affiliate Kia Motors, have proven an “abundance of cash” with the deal. The unions are in a long-lasting confrontation with management over workers pay, and called for the cancellation of the purchase and for the cash to be spent on workers. Both companies are being sued by the unions over pay, with verdicts due.
Hyundai Motor Co. closed Tuesdays session for a 2.05% loss at KRW 191 500 (~$191.5) per share, valuing the company at KRW 51.35tn (~$51.35bn). The stock has now lost 13.5% since last Thursday, when the purchase was announced, and is down 24.90% from a year ago. According to analysts at the Financial Times, however, the stock is set for a rebound. 32 analysts offering 12-month price targets for Hyundai Motor Co have a median target of KRW 287 500, with a high estimate of KRW 330 000 and a low estimate of KRW 200 000.
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