Photo: Reuters/Chaiwat Subprasom

Hyundai Motor Group (HMG) shares were up 2.7% Friday on rumors that the group would announce a restructuring road map next week, according to a note from Citibank analysts.

Restructuring plan will reportedly include 1) spin-offs of HMC, Kia and Mobis, 2) formation of “mega-holdco” through a merger of holdcos, and 3) E.S. Chung/M.K. Chung family will use stakes in Glovis to take control over “mega-holdco.”

The unconfirmed report comes from Korean news outlet Maekyung, but it was later reported that Hyundai has denied the report

Citibank: “Yet, it is a bit early to conclude what would be HMG’s ultimate shape after potential restructuring (if any) given the complexity of current shareholding structure and moving parts.

“While we think the restructuring process could enhance the value of all group affiliates in general (i.e., valuation re-rating amid improving governance and shareholder returns), we continue to think HMC and Mobis have more potential in shareholder returns vs. other group peers given their more abundant cash holdings and stronger balance sheets, as well as family’s greater stakes vs. other group peers currently.

“If HMG were to confirm restructuring officially, then sentiment might worsen on Hyundai Glovis, which is the biggest asset held by the family currently (utilizing Glovis to take over key assets).”