Hyundai's target prices cut by foreign investors on currency, land deal

A slew of foreign investors are trimming their target prices on Hyundai Motor Co., South Korea's top automaker, as the weakening yen and the firm's jaw-dropping real estate deal are feared to undermine its competitiveness and profitability, data showed on Wednesday.

   The median target price by 11 foreign brokerages such as Nomura Holdings Inc. was put at 248,000 won ($238) as of Tuesday, sharply down from 305,000 won forecast early this year, according to the data compiled by Bloomberg.

   More recently, the automaker has suffered a further downgrade in its target prices after it won an auction for prime real estate for its new headquarters in Seoul with a 10.55 trillion won ($10

billion) bid, which some estimate may be the biggest-ever deal in Asia.

   The price is higher than the automaker's profit of 9 trillion won logged last year, and is triple the land's assessed value.

   Following the land deal, Citigroup Inc., JPMorgan Chase & Co., and Nomura Holdings Inc. cut their investment ratings on Hyundai Motor, assessing that the transaction was over-priced.

   Nomura estimated Hyundai may have to spend up to 20 trillion won, when tax and construction costs are included.

   The landmark deal came as the automaker shows signs of slowing profit growth in the face of a strong local currency and increased competition with foreign rivals.

   Stunned and disgruntled by the land deal, investors continued to dump Hyundai Motor and other group affiliates on the Seoul stock market.

   Hyundai Motor and its affiliate, Kia Motors Corp., fell to their lowest levels in one year on Tuesday, closing at 191,500 won and 52,500 won, respectively. (Yonhap)