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  1. 1. 1H15 Earnings Release Hyundai Capital Services
  2. 2. 1 Disclaimer This presentation material is being presented to you solely for your information only and may not be taken away by you and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. These presentation materials have been prepared by Hyundai Capital Services., Inc. (HCS or the Company), solely for the use at this presentation and have not been independently verified. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. Neither the Companies nor any of theirs affiliates, advisers or representatives accepts any responsibility whatsoever for any loss or damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice and its accuracy is not guaranteed. Neither the Companies nor any of their affiliates, advisers or representatives make any undertaking to update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice. Certain information and statements made in this presentation contain forward-looking statements. Such forward-looking statements can be identified by the use of forward-looking terminology such as anticipate,believe,considering,depends,estimate,expect,intend,plan, planning, planned, project, trend, and similar expressions. All forward-looking statements are the Companies current expectation of future events and are subject to a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking statements. Certain industry and market data in this presentation was obtained from various trade associations, and the Companies have not verified such data with independent sources. Accordingly, the Companies make no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors. This presentation does not constitute an offer or invitation to purchase or subscribe for any shares or other securities of the Companies and neither any part of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any decision to purchase shares in any offering of shares of the Companies should be made solely on the basis of the information contained in the offering document which may be published or distributed in due course in connection with any offering of shares of the Companies, if any.
  3. 3. 2 Major Issues in 1H15 Asset growth through Enhanced Business as a Captive Finance despite unfavorable market conditions Laid foundations for better profitability through Asset Quality improvement and Bad Debt Expense decrease, as a result of constant risk management. Overseas operation expansion through strengthened Global Business capabilities
  4. 4. 3 Business Environment Domestic Economy Domestic Auto Sales Stagnant captive auto sales Strong sales recorded by Import auto makers Improvement expected in 2H through full model change of best-sellers (HMC Avante, KMC K5 etc.) (unit : *1,000) Economic recovery delayed GDP growth rate lowered (Bank of Korea, 15. 7) Low interest continued Competition intensified as funding cost gap narrows 2.0% 2.8% 3.3% 2.4% 2.75% 2.50% 2.00% 1.50% 2012 2013 2014 1H15 GDP growth rate Key rate 668 641 685 336 482 458 465 243 392 441 510 279 1,542 1,540 1,660 857 74.6% 71.4% 69.3% 67.5% 2012 2013 2014 1H15 HMC KMC Others HMG M/S
  5. 5. 4 Asset Asset Portfolio Business Strategies 2015 (unit: KRW bn) 2012 2013 2014 1H15 YTD New car 11,000 10,510 10,472 10,832 3.4% Auto lease 3,805 3,976 3,818 3,896 2.0% Used car 1,410 1,484 1,464 1,418 -3.1% P-loan 1,959 2,111 2,162 2,075 -4.0% Mortgage 1,641 1,796 1,745 1,667 -4.5% Auto-finance Competitiveness reinforced through OEM co-marketing Specialized products launch to meet customer needs (PCP, Personal lease) Personal-finance Strengthened marketing to target prime customers Reference : OEM co-marketing(unit: KRW bn) Jan Interest lowered by 1% on all KMC vehicles Mar Interest lowered by 1% on all HMC vehicles KMC Morning Coffee promotion HMC KRW 100,000 Miracle Avante promotion May HMC interest-free on Sonata 16,214 15,970 15,754 16,146 4,070 4,428 4,569 4,590 20,285 20,397 20,323 20,735 79.9% 78.3% 77.5% 77.9% 2012 2013 2014 1H15 Auto asset Non-auto asset % of Auto asset
  6. 6. 5 Profitability Excluding FX effects Including one-off disposal loss Summary of Income Statement 2013 2014 1H14 1H15 YoY Operating Rev 2,915.1 2,745.9 1,355.6 1,328.2 -2.0% Operating Exp 2,486.8 2,423.8 1,212.0 1,121.3 -7.5% Interest expense 800.6 752.6 387.3 336.2 -13.2% Lease expense 505.9 500.5 250.1 250.3 0.1% SG & A 671.7 702.3 321.2 360.1 12.1% Bad debt expense 453.1 418.3 226.6 149.2 -34.2% Operating Income 429.1 321.9 143.3 207.4 44.8% Non-operating Income 3.3 9.1 11.0 21.8 98.2% Equity method income 4.5 17.0 -20.9 19.1 TB Net Income 391.4 237.7 85.1 173.9 104.3% ROA 1.9% 1.3% 0.8% 1.7% 0.9%p Analysis on Income Statement Operating Revenue Product interest lowered due to key rate drop Operating Expense Interest expense decreased due to key rate drop Bad debt expense decreased due to asset quality improvement Net Income Equity method income increased due to stabilized overseas operation (unit: KRW bn) 6.8% 6.6% 6.0% 5.0% 2012 2013 2014 1H15 New car finance APR
  7. 7. 6 Asset Quality Delinquency Reserve (unit: KRW bn) 2.5% 2.7% 2.4% 2.2% 1.0% 1.1% 1.0% 0.9% 2012 2013 2014 1H15 30+days delinquency ratio 30+days delinquency ratio (New car) 385 437 440 449 280 326 334 300 665 763 774 749 144.9% 154.4% 162.2% 163.4% 2012 2013 2014 1H15 Allowance Reserve 30+ days coverage
  8. 8. 7 Capital Structure Capital Adequacy RatioLeverage Based on previous quarters total capital since 2013 2012 2013 2014 1H15 YTD Total Asset 21,885 22,369 22,508 22,682 0.8% Total Capital 3,031 3,400 3,395 3,502 3.2% (unit: KRW bn) 2012 2013 2014 1H15 YTD Adjusted Total Asset 20,438 20,673 21,793 21,955 0.7% Adjusted Total Capital 2,954 3,130 3,346 3,552 6.2% (Unit: KRW bn) 7.2X 6.6X 6.6X 6.5X 2012 2013 2014 1H15 14.5% 15.1% 15.4% 16.2% 2012 2013 2014 1H15
  9. 9. 8 Domestic bond 56.1% Overseas bond 22.0% Domestic ABS 9.3% Overseas ABS 3.9% Loans 7.2% CP 1.5% Funding Funding Portfolio by product Asset-Liability Maturity 2014 1H15 Total Funding 5,893 3,317 Bond 3,353 1,957 Domestic 2,510 1,511 Overseas 843 446 ABS 600 400 CP, Bank loan 1,940 960 2014 1H15 (unit: KRW bn) Funding Guidelines Long-term debt : 60% or more By Product: ABS