Even If It Clears the Governance Overhang, Hyundai Mobis Faces a New Mountain: China's Robotics Rivals

[Korea Financial Times, Kim JaeHun] Hyundai Mobis (CEO Lee Kyu-seok) sits at the center of Hyundai Motor Group's circular shareholding structure. Because of this, despite solid earnings, the company remains trapped in chronic undervaluation due to a persistent "governance discount." Last year, expectations for governance reform following the government's revision of the Commercial Act—combined with a premium attached to its robotics business—helped its price-to-book ratio (PBR) rebound, but the metric still has not broken above the key threshold of 1.0x.

Now, even the robotics business that had been seen as a source of hope is facing a new challenge: price competition from Chinese manufacturers. Industry observers say that for Hyundai Mobis to earn a re-rating to a PBR above 1.0x, it will need to demonstrate process technology and mass-production reliability capable of overcoming China's low-cost offensive.

Hyundai Mobis Dons Robotics, But PBR Still Below 1x

According to the investment banking industry on September 10, Hyundai Mobis's PBR hit a 10-year low of 0.48x at the end of 2024. Since then, it has recovered to around 0.77x as of the end of the first half of this year, driven by an aggressive shareholder-return policy—including active share buybacks and cancellations to raise its total shareholder return (TSR)—along with expectations surrounding its entry into robotics components.
Even so, this remains well below a PBR of 1.0x. The valuation discount looks especially deep compared with major global parts makers such as Denso and Continental, which trade above 1.0x PBR.

PBR is a metric that shows how a company's share price compares to its book value. A PBR below 1 means the stock is trading below its book value—which can make the shares an attractive target for investors.

Hyundai Mobis's market capitalization stands at KRW 37.5001 trillion, the largest among domestic auto parts makers. Within Hyundai Motor Group itself, it ranks third, behind core automakers Hyundai Motor (KRW 79.2413 trillion) and Kia (KRW 49.4653 trillion).

The company's first-half results this year were also solid. Hyundai Mobis posted first-half revenue of KRW 31.8852 trillion, up 3.9%, while operating profit rose 8.0% to KRW 1.7778 trillion.

Despite holding the industry's highest market cap and posting steady earnings, Hyundai Mobis has been unable to shake off its undervaluation. Its PBR came in at 0.66x in 2021, 0.49x in 2022, 0.53x in 2023, 0.46x in 2024, and 0.68x in 2025—never exceeding 1.0x over the past five years.

Governance Risk and Heavy Captive Sales Weigh It Down

Behind Hyundai Mobis's undervaluation lies a governance risk that has long drawn criticism. The company sits at the core of the group's circular shareholding chain, which runs from Hyundai Mobis to Hyundai Motor to Kia and back to Hyundai Mobis. Uncertainty stemming from delayed governance reform has persisted for years.

The key risk is that if any single affiliate in this circular shareholding chain comes under attack from outside forces, the entire chain of control could collapse. The structure also allows the group's controlling family to exercise control over the whole conglomerate with a relatively small stake—but that same feature has drawn criticism for enabling the controlling family to evade accountability and for fostering inefficient decision-making.

For this reason, when the Lee Jae-myung administration emphasized advancing corporate governance reform last year, Hyundai Mobis drew attention on expectations that the move would accelerate the dismantling of Hyundai Motor Group's circular shareholding structure. Indeed, Hyundai Mobis shares rallied and, for the first time this year, closed above the KRW 300,000 mark on July 3, coinciding with the National Assembly's passage of the revised Commercial Act.

The company's dependence on group affiliates is another key factor behind its undervaluation. Hyundai Mobis grew alongside the expansion of Hyundai Motor and Kia's vehicle output, securing a stable stream of work in the process. But this growth model, built on internal (captive) transactions, carries a critical limitation: the parts maker's fate is entirely tied to the earnings trajectory of the finished-vehicle makers—constraining its ability to secure independent margins and to be evaluated on its global competitiveness.

According to Hyundai Mobis's business reports, the share of its captive sales to Hyundai Motor and Kia has trended upward over the past five years: 82.1% in 2021, 83.9% in 2022, 84.4% in 2023, and 88.7% in 2024. It edged down slightly to 88.2% in 2025—a 0.5 percentage point decline—and stood at around 81% in the second quarter of this year.

Robotics Onboard, But China's Offensive Is the Wild Card

To overcome these structural limitations, Hyundai Mobis has turned to robotics as its relief pitcher. While maintaining its traditional auto parts lineup (lamps, bumpers, etc.), the company is restructuring its business around high-value-added components central to robotics—chiefly actuators, the core drivetrain component, and hand modules.

Actuators are the key components that function like human joints and muscles; they account for as much as 40–50% of the total manufacturing cost of a humanoid robot, giving them an outsized share of both cost and margin.

Hyundai Mobis supplies actuators for Atlas, the humanoid robot developed by Boston Dynamics, the group's robotics affiliate. Boston Dynamics plans to produce 30,000 units of Atlas annually starting in 2028, to be deployed at Hyundai Motor Group's major global production sites.

For Hyundai Mobis, which aspires to become a global robotics component supplier, this secures a solid anchor customer. The plan going forward is to expand its customer base to a wider range of robot manufacturers.

The problem is that just as the robotics components market enters a genuine growth phase, it is also entering a fierce game of chicken. Major Chinese auto parts makers such as Tuopu and Minth have already moved swiftly to build their own mass-production systems for robotics actuators, moving to claim an early lead in the global market. The overwhelming cost competitiveness and vertical integration characteristic of China's robotics value chain pose a significant threat to Hyundai Mobis.

In the short term, Hyundai Mobis is expected to benefit from U.S. government restrictions on imports of Chinese-made robots and components. But as it expands beyond captive demand to build a broader customer base among global robot manufacturers, fierce price-cutting competition with Chinese suppliers looms as an unavoidable challenge.

These concerns have already dimmed Hyundai Mobis's robotics premium. Its share price climbed to roughly KRW 820,000 by June, following the company's January announcement of its pivot to robotics. It has since fallen by about 50%, currently trading around the KRW 410,000 level.

An industry source in the securities sector said, "Securing volume with Boston Dynamics carries real significance, but for the market to recognize a re-rating above 1.0x PBR, [Hyundai Mobis] will need to prove process technology and mass-production reliability that can overcome China's low-cost offensive." The source added, "Only once the company presents a clear direction for governance reform, alongside a diversification of orders toward external automakers and robot manufacturers, will it finally be able to break free of the low-PBR trap."

Kim JaeHun (rlqm93@fntimes.com)