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IR presentation: Hyundai Capital 1Q 2012
 

IR presentation: Hyundai Capital 1Q 2012

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IR presentation: Hyundai Capital 1Q 2012

IR presentation: Hyundai Capital 1Q 2012

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    IR presentation: Hyundai Capital 1Q 2012 IR presentation: Hyundai Capital 1Q 2012 Presentation Transcript

    • Hyundai Capitalis...Investor Presentation Hyundai CapitalMay 2012
    • DisclaimerThese presentation materials have been prepared by Hyundai Capital Services., Inc. (“HCS or the Com-pany”), solely for the use at this presentation and have not been independently verified. No representa-tions or warranties, express or implied, are made as to, and no reliance should be placed on, the accu-racy, fairness or completeness of the information presented or contained in this presentation. Neither theCompanies nor any of theirs affiliates, advisers or representatives accepts any responsibility whatsoeverfor any loss or damage arising from any information presented or contained in this presentation. The infor-mation presented or contained in this presentation is current as of the date hereof and is subject to change without notice and itsaccuracy is not guaranteed. Neither the Companies nor any of their affiliates, advisers or representatives make any undertaking toupdate any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investmentor other advice.Certain information and statements made in this presentation contain “forward-looking statements.” Such forward-lookingstatements 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-lookingstatements are the Companies’ current expectation of future events and are subject to a number of factors that could cause actualresults to differ materially from those described in the forward-looking statements. Caution should be taken with respect to suchstatements 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 notverified such data with independent sources. Accordingly, the Companies make no representations as to the accuracy or com-pleteness 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 Com-panies and neither any part of this presentation nor any information or statement contained therein shall form the basis of or berelied upon in connection with any contract or commitment whatsoever. Any decision to purchase shares in any offering of sharesof the Companies should be made solely on the basis of the information contained in the offering document which may be pub-lished or distributed in due course in connection with any offering of shares of the Companies, if any.The contents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person orpublished, in whole or in part, for any purpose.
    • No.1 Consumer Finance Company 01 One of the most successful finance companies in Korea Leading auto financier in Korea with a high market share Eight-year-long partnership between two global leaders ; Hyundai Motor and GE Capital - Jointly-formed boards committed to pro-active oversight - GE Capital appoints key executives in risk management & finance Increasingly profitable since the inception of the joint venture(JV) Captive finance company for Hyundai Motor Group in Korea, and the only Korean consumer finance platform for GE Capital
    • Growing Partnership with GE Capital 02 - Leading car makers in Korea 2012 GE Capital extends its credit line with approximately 80% market share to 2015 56.5% (Total investment as of 1Q12: USD 2.2 Bn) - Stable & solid operational base - Extensive sales network GE Capital increases its back-up 2009 credit line from USD 600 mm to USD 1 bn - Powerful financing arm 2007 GE Capital provides USD 871mm in - Effective marketing tool direct funding - Most successful joint venture - Sole consumer finance window in Kore 2006 - Hyundai’s JV with GE Capital makes HCS the sole consumer finance business in Korea for GE Capital - Advanced knowledge on risk - GE Capital provides USD 600mm back-up credit line management - Financial support 43.3% GE Capital increases its - Active involvement in daily 2005 holdings to 43.3% operations as well as in management GE Capital acquires 38% 2004 equity interest in HCS
    • Performance of Hyundai Motor Company 03Strength PerformanceProduct Mix Total Sales(‘000s) 58% 3,612 4,059 3,106 19% 17% 6% 914 1,019 Compact Mid&Large RV Commercial 2009 2010 2011 1Q11 1Q12Market Diversification OP Margin 31.4% 10.4% 10.0% 11.3% 16.7% 18.9% 14.6% 18.4% 7.0% 8.8% Korea N.Am. Europe Asia Other 2009 2010 2011 1Q11 1Q12Brand Value Net Profit(KRW Bn)・ Increase in residual value of vehicles due to strengthened brand awareness 8,105 6,001・ Boost in luxury car sales has increased the 2,962 1,877 2,451 average selling price of vehicles 2009 2010 2011 1Q11 1Q12
    • Strategy : Capitalize on Our Leading Position 04 Maintain leadership in auto financing while operating in non-auto financing sector to diversify business portfolio Use innovative marketing to attract customers and keep them satisfied Place top priority on stringent risk management - Maintain a diversified and stable funding portfolio - Employ risk-based pricing (RBP) and stress pre-emptive risk management
    • Investment Highlights 05 Achieved stable 1Q12 financial results with operating profit of KRW 181 billion and net income of KRW 129 billion Maintained healthy asset quality with 2.1% 30+ day delinquency rate Strong commitment to abide by the target leverage of 8x Liquidity increase indicated by CP Coverage of 632% Continuously successful funding diversification - Swiss Franc, Malaysian Ringgit, 144A/RegS Issuances Hold excellent credit ratings based on strong fundamentals - S&P : BBB+(S), Fitch : BBB(P), Moodys : Baa2(P) - Domestic : AA+(S)
    • Macroeconomic Indicators in Korea 06GDP Growth Trend Domestic Auto Sales (YoY, unit : 000) HMC KMC Others 1,465 1,474 6.1% 1,394 321 297 279 413 485 493 3.6% 2.8% 2.2% 80.0% 78.1% 363 331 79.8% 70 60 703 660 684 126 116 0.2% 80.2% 81.8% 167 155 2008 2009 2010 2011 1Q12 2009 2010 2011 1Q11 1Q12Source : Bank of Korea Source : KAMA
    • Korean Consumer Finance Market’s Unique Features 07 Conservative lending environment - Average auto loan life of 1.5Y (Notional life of 36M + Amortization Structure) - Average down-payment for a car is around 30% - Low usage of revolving credit card products Favorable market environment for captive finance companies - New car dealerships exclusively managed by auto makers - Stable second-hand car market : high residual value of used cars Strong credit infrastructure - Govemment’s strict regulation on LTV & DTI Ratios . Average LTV ratio for mortgages is less than 50% (Commercial Banks) - Well developed Credit Bureau system
    • Disciplined Asset Portfolio : Stability and Profitability 08Receivables Breakdown by Product (KRW Bn) New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage Others 19,806 19,596 18,788 7.4% 7.4% Maintain auto-related and non 16,480 8.8% 9.1% auto-related assets in the ratio of 9.4% 9.9% 8.7% 80 : 20 7.9% 7.4% 7.6% 8.4% 7.2% 17.3% 17.9% 16.3% 15.8% Only 9.4% of portfolio is personal loan and not collateralized by auto asset or 82.8% 81.1% 81.9% 82.4% real estate 56.9% 57.2% 57.6% 58.1% 2009 2010 2011 1Q12
    • Pre-emptive Approach to Risk Management 09 Risk control committee - Sets policies and reports to BOD - Equal membership between Hyundai Motor and GE Capital - Includes GE Capital’s Asia Chief Risk Officer Using GE Capital’s expertise in risk management - Tailored use of GE Capital’s credit scoring system - Rigorous compliance and anti-fraud processes - Dynamic monitoring of payments, status changes - Adoption of GE Capital’s risk reporting format Prioritizing risk management over volume growth - Application of Risk-Based Pricing(RBP)
    • Combining Strong Governance with Innovation 10 Committed to excellence in governance . Active board oversight supported by three key committees - Risk Control Committee - Executive Finance Committee - Asset & Liability Committee . Transparent corporate governance . GE Capital has veto rights on all major decisions Supporting innovative culture and meritocracy . Merit-based culture with performance-linked compensation . Rewards for innovation and development of new business opportunities - Used car brokerage web-site - Extended warranty program for vehicles . High quality employees from diverse background
    • Solid Profit Underscores Strong Fundamentals 11Income Statement (KRW Bn) Operating Income (KRW Bn) 2010 2011 1Q11 1Q12 YoY 659 633Operating Revenue 3,274 3,331 939 916 -2.4% 541(Excluding FX Effect) 2,889 3,125 757 796 1.6%Operating Expense 2,642 2,672 757 735 -2.9% 182 181(Excluding FX Effect) 2,256 2,466 575 588 2.4%Bad debt Expense 145 354 60 83 39.0% 2009 2010 2011 1Q11 1Q12Operating Income 633 659 182 181 -0.4% - Operating income remained stable in 1Q12ROA 3.6% 3.4% 3.8% 3.7% - Maintained high ROA based on strategy with a focus on achieving sustainable profitabilityNet Income 489 507 145 129 -11.1%
    • Excellent Asset Quality & Conservative Reserve Policy 1230+Delinquency Rate (%) Total reserve VS Regulatory Requirement (KRW Bn) Regulatory Requirement Reserve under K-IFRS Supplement Reserve Total Reserve/ Regulatory Requirement 153.3% 118.1% 117.1% 115.5% 617 610 2.1% 2.0% 521 534 1.8% 474 265 281 1.6% 427 401 208 288 345 336 265 2009 2010 2011 1Q12 2009 2010 2011 1Q12 * IFRS impact: Estimated Loss based calculations->Incurred Loss based calculations
    • Solid Capital Base 13Leverage Trend (KRW Bn) Capital Adequacy Ratio (KRW Bn) Managed Borrowing Leverage Shareholder’s Equity Adjusted Capital CAR Maximum Leverage 15.7% According to Dividend Policy : 13.7% 13.9% 8.0x 13.0% 7.4x 2,813 2,656 2,755 6.7x 2,622 6.5x 2,432 2,375 6.2x 2,156 2,216 17,330 17,396 16,560 14,378 2009 2010 2011 1Q12 2009 2010 2011 1Q12* * IFRS impact: Asset increase due to Inclusion of securitized receivables from 10% to 100%
    • Well Diversified Funding Portfolio 14Funding Portfolio by Product Funding principles Maintain the proportion of ABS under 20% and CP under 10% Diversify funding portfolio in terms of currency, region and product ABS Maintain the average maturity ratio of liability 13.8% to asset over 100% CP 3.7% Contingency plans under regular review Loans 8.5% Bonds 74.0% Key Achievements 1Q 2012 Increased long term funding proportion Funding Balance : KRW 17,396 Bn New Overseas Issuances : Long-term funding : 66.7 % - 144A/RegS: 5.5 years - USD 500 mm - Malaysian Ringgit: 5 years - MYR 320 mm - Swiss Franc: 5 years - CHF 200 mm
    • Strengthened Liquidity Position 15CP Coverage Ratio (KRW Bn) Cash Flow Profile (KRW Bn) CP Cash Credit Line CP Coverage 632.3% Financial Receivables 507.7% - GE Capital : 1,138Bn* 10,481 - Others : 1,351Bn 5,693 602 170 382 216.8% 2,268 167.7% Total : KRW 2,489Bn ~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y Liabilities (Debt) 2,489 5,794 3,097 2,511 3,227 2,022 1,865 1,391 1,338 ~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y 1,367 Net Cash Flow 1,621 1,4101,027 1,297 971 750 650 4,686 739 2,466 -829 -1,263 -1,852 -1,009 2009 2010 2011 1Q12 ~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y*$1= W 1,137.8 as of Mar 31st, 2012
    • Global Expansion 16 Office/Corporate without fundingUKJVEstablished : Dec.2011Capital : £20 mmStake : HCS 29.99% China JV Russia Established : Jun.2012(expected) HCA Capital : RMB 0.5 bn Stake : HCS 46% Established : Sep.1986 Capital : $ 1 bn Hyundai Capital Europe Stake : HMA 94%, KMA 6% Established : May.2010 India Office Capital : € 2.8 mm Representative Office Stake : HCS 100% Established: Jul. 2010 Hyundai Capital Germany Established : Sep.2009 Brazil Office Capital : € 2mm Representatives Stake : HCS 30.01% Australia Office Dispatched Representatives Dispatched Connection with HMC/KMC Minimize Entry Risk HCS ・ Provide auto financing and related ・ Minimize market entry risk through Strategy services for HMC and KMC vehicles establishing joint ventures
    • Investment Highlights 17 Achieved stable 1Q12 financial results with operating profit of KRW 181 billion and net income of KRW 129 billion Maintained healthy asset quality with 2.1% 30+ day delinquency rate Strong commitment to abide by the target leverage of 8x Liquidity increase indicated by CP Coverage of 632% Continuously successful funding diversification Hold excellent credit ratings based on strong fundamentals
    • Investor Relations ContactsJungsang Kim, Head of Investor Relations Minchul Seo, Deputy General Manager of Investor RelationsPhone +82 2 2167 7034 Phone +82 2 2167 7051jungsang.kim@hyundaicard.com mcseo@hyundaicapital.comBrett Moffat, Manager of Investor Relations Youn Chung, Manager of Investor RelationsPhone +82 2 2167 5510 Phone +82 2 3770 9737brett@hyundaicapital.com youn.chung@hyundaicapital.comhttp://ir.hyundaicapital.com/