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Seoul. Shares in Hyundai Motor have risen 13 percent since rival Toyota skidded into a mass-recall crisis in January, sending the latter company’s stock tumbling by nearly a fifth.

For South Korea’s Hyundai, the world’s No. 4 carmaker with affiliate Kia Motors, the timing of Toyota’s sticky-gas-pedal woes could not have been better as it has worked hard to improve its image for quality.

That, say analysts, could see consumers worried by Toyota’s tarnished safety record shifting to more affordable Hyundais.

But others warn that a stronger South Korean won against both the US dollar and the yen could eat into Hyundai’s under­lying profits — which hit a record last quarter — and its US market share. Of 42 analysts covering Hyundai, nine rate the stock a “strong buy” and 29 a “buy.”

Hyundai, the only major motor-vehicle manufacturer to increase its US sales last year, is set to gain more market share this year as new models go head-to-head with Toyota, analysts said.

Ahn Dong-hoon, analyst at Heungkuk Securities, reckons the South Korean company’s policy of offering a balanced range of small cars, sedans and sport utility vehicles will help increase average sales.

As Hyundai’s fortunes have improved, foreign investors have pushed up their stake to 37 percent from 26 percent a year ago.

According to Reuters data, Hyundai, valued at about $23 billion, trades at 8.9 times forecast 2011 earnings, cheaper than Toyota’s approximately 19 times.

“We expect Hyundai shares to go as high as 150,000 won, but its earnings tend to be vulnerable to government policies, say China’s rapid shift into tightening measures, so we’re not sure if it can sustain the upward momentum,” said HK Chae, senior fund manager at Meritz Investment Bank.



Reuters