Elliott perspectives on

Hyundai Motor Group’s

Restructuring Plan
1
Important Information

This Presentation (i) is from and is published by Elliott Associates, L.P. (“EALP”) and Potter Capital LLC (“Potter”), both of which are Elliott affiliates; and (ii) supplements the letter and presentation from EALP
and Potter to the directors of Hyundai Mobis Co., Ltd., Hyundai Motor Company, and Kia Motors Corporation, dated 23 April 2018 (the “Letter”). Capitalized terms used in this Presentation shall unless
otherwise defined bear the meanings ascribed to them in the Letter. Many of the statements in this Presentation as well as in the Letter are the opinions and/or beliefs of EALP and/or Potter, which are based
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increase or reduce their holdings of any Hyundai group entity’s shares or other equity or debt securities (including such securities and derivative products directly and/or indirectly related to such securities
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2
Why are we here?

• Elliott is a significant shareholder in Hyundai Mobis Co., Ltd. (“Mobis”), Hyundai Motor Company (“HMC”) and Kia Motors Corporation (“Kia”),
collectively the Hyundai Motor Group (“HMG”), holding over 1.5% common shares in each of the companies

• HMG announced a plan for business restructuring after market close on 28 March 2018 which involv es Mobis spinning off its domestic module and
after-sales servicebusinesses and merging the spun-off businesses with Glovis (“HMG Restructuring Plan” or the “Plan”)

• Mobis has communic ated in its materials that this restructuring is needed to (i) sever existing circular shareholdings, and (ii) eliminate potential ris ks
arising from existing affiliate transactions 1

• However, the spin-off merger by itself does nothing to resolve the existing circular shareholding

Mobis
Mobis
(post spin-off)

HMC Kia HMC Kia

Glovis
Glovis Hyundai Steel Hyundai Steel
(post merger)

• Post spin-off merger, a share swap between the principal shareholders’ stake in Glovis and Kia’s stake in Mobis is required to sever the main
circular shareholding. However, thePlan is devoid of a transparent process to realize fair value for Kia’s stake in Mobis

• The Plan to merge Mobis’s spun-off business with Glovis is not supported by sound business rationale and the valuation of Mobis ’s spun-off
business is based on a questionable set of assumptions that results in its significant undervaluation

Notes: 1. Page 3 of Spin-off Merger IR Material published on 28th March 2018.

3
Why are we here?

• In reality, the HMG’s Restructuring Plan has many of the characteris tics of a similar transaction that Elliott voiced significant concerns about three
years ago: the merger between Samsung C&T and Cheil Industries

• As was the case with Samsung C&T’s management, HMG management has failed to act in the best interest of the companies and their respective
shareholders with this Plan. The HMG Restructuring Plan continues the Group’s poor track record of deals , which have been value dilutive for the
shareholders (e.g. KEPCO land purchase, and acquisitions of Hyundai E&C and Green Cross Life)

• With the support of many domestic and international shareholders, Elliott unveiled its Accelerate Hyundai Proposals on 23 April 2018 to make
recommendations on how the HMG Restructuring Plan could be improved by adopting a holding company structure

− A holding company structure is more tax effic ient and sustainable in the long run. Elliott agrees that the leasing business is integral to HMG’s
auto business and supports a restructuring that will enable the Group to retain control of the leasing business that is legal and within the confines
of current regulations

− Elliott also believes a holding company structure can be achieved via a further demerger of the financial subsidiaries. Hyundai Capital does not
have to be a subsidiary of HMC and Kia for it to support the Group’s auto business

• Elliott also proposed actionable targets for balance sheet optimization, improved shareholders returns, and board structures and article
amendments that would ensure best-in-class corporate governance for the Group

• Since then, HMG has announced token measures on share buybacks and cancellation of some existing treasury shares. While Elliott believes this
is a positive development, more significant measures are needed to address the long-unresolved is sues at the Group that have led to significant
valuation discounts and underperformance at each Mobis, HMC and Kia

• Elliott supports a fair restructuring of HMG that treats all shareholders equally, and the current HMG Restructuring Plan is neither fair nor
comprehensive enough to receive its support

Notes: 1. Page 3 of Spin-off Merger IR Material published on 28 March 2018.

4
The HMG Restructuring Plan has many of the characteristics seen in the merger between
SC&T and Cheil Industries
The transaction is designed to utilize principal
shareholders’ shareholding in one affiliate to increase
their shareholding in another
The transaction lacks clear business logic
A mid- to long-term vision is presented with significant
upside but with limited support for execution
Management relies on a questionable set of assumptions
to defend a merger based on depressed valuation levels
All these factors combined results in a heavily
discounted valuation and an unfair merger ratio
But the Management is quick to point out that the ratio is
based on a statutory formula
Notes: 1. Page 21 of Samsung C&T – Cheil Industries Merger Investor Presentation June 2015.
2. Page 4 of Hyundai Mobis-Hyundai Glovis Calculation of Spin-off Merger Ratio (Summary of Merger Ratio Valuation Report).
Merger between Samsung C&T and
Cheil Industries (July 2015)
• Principal s harehol ders hel d nearly 43% s tak e in Cheil
Industries but only a 1.4% stake in Samsung C&T
• The tr ans action com bined a leading engineering and
construc tion company (Samsung C &T) with a de facto
holdi ng company (Cheil Industries) that had a dispar ate
set of businesses with limited profitability
• Management cl aimed significant sy nergi es targeting KRW
60 trillion of revenue and operati ng profits of KRW 4
trillion by 2020
• Recent analyst consensus estimates w ere at KRW 32
trillion of revenue and KRW 1.3 trillion of operating profit
for 2020, significantly bel ow management’s original
targets
• Samsung C &T management cl aimed that their business
faced significant headwinds with oper ational and growth
challenges
• In comparison, alleged violations of acc ounting rules at
Samsung Biol ogics that have rec ently come to light
suggests that there may have been critical flaw in the
valuation process
• The merger ratio of 0.35 C heil Industries shares for 1
Samsung C&T share significantly undervalued Samsung
C&T, valuing it effectively at -0.06x P/B
• “As both Samsung C&T and Cheil Indus tries ar e listed on
the KOSPI market, the 1 : 0.3501 m erger ratio is
mandated by Korean laws and regulations” 1
Spin-off merger between Mobis and
Hyundai Glovis (May 2018)
• Principal s hareholders currently hold a 30% s tak e in
Hyundai Glovis but only a 7% stake in Mobis
• Splitting Mobis’s international and domestic businesses
risks diseconomies of sc ale for a Group whic h has
substantial multinational operations
• Merging dom estic module and after-sale services
businesses with a l ogistics c ompany has no c ompar able
precedents that we are aware of
• Remaining Mobis’s Mid-Long T erm Vision tar gets
revenue of KRW 44 trillion by 2025, implying 8% CAGR
• Glovis’s 2025 Vision targets rev enue of KRW 40 trillion
bas ed on i ncreas ed or ders from global OEMs and new
shippi ng routes but i n reality much of the growth is
inorganic and from the merger with Mobis
• Samil PwC’s independent valuation is based on a
questionable set of assumptions that has technical errors
• The s pin-off terms val ue Mobis’s s pun-off business at
6.2x P/E (ex-c ash) despite it being si gnificantly more
profitable than Glovis (8.6x P/E)
• “In a s pin-off merger of busi ness lines, there is no market
value for the spun-off business whic h stipulates that the
statutory formula for the merger ratio betw een a listed
company and an unlisted company would apply” 2
5
The Samsung C&T - Cheil merger was voted through but at significant costs to
independent minority shareholders
• The merger between Samsung C&T and Cheil Industries proceeded despite shareholder opposition, and Samsung C&T share price has languis hed
since the merged entity relisted on 15 September 2015. Samsung C&T has underperformedKOSPI by 49% since then

• Current analyst consensus estimate Samsung C&T’s revenue to reach KRW 32 trillion by 2020 as compared to Samsung C&T’s original target of
KRW 60 trillion (47% shortfall) and operating profit to reach KRW 1.3 trillion by 2020 as compared to Samsung C&T’s original target of KRW 4
trillion (68% shortfall)

Share price performance1

140

130
+27%

120

110

-49%
100

90

80
-22%
70

60
9/15/2015 12/15/2015 3/15/2016 6/15/2016 9/15/2016 12/15/2016 3/15/2017 6/15/2017 9/15/2017 12/15/2017 3/15/2018

SC&T KOSPI

Source: Market data

Notes: 1. Local currency share price performance indexed to 100.

6
HMG has a poor track record of deals that have been value dilutive for shareholders
• We have seen multiple examples in the past of capital being spent at HMG that have been value dilutive for shareholders, leading to analy sts and
shareholders voicing significant concerns.
• HMG’s purchase of land in Gangnam dis tric t from KEPCO in 2014 is one such example. There have been many other bad deals including the
Group’s acquisition of Hyundai E&C at significant premium to market, and Mobis’s acquisition of Green Cross Life.
Purchase of land in Gangnam district (2014) • Acquisition price of KRW 10.6 trillion (US
$9.8 billion) represents 217% premium
over the land’s appraisal value of KRW
3.3 trillion, and is reported to be double
the offer made by the second highest
bidder, Samsung Electronics
• The investment represents 18%, 16%,
12% of current market cap for HMC, Kia,
Hyundai Mobis, respectively1
• Share price dropped by 8 to 9% for each
of HMC, Kia and Mobis on the day
following the announcement (September
18, 2014)
• It has been more than 3 years since the
purchase but there has been limited
progress on developing the site with
meaningful construction yet to start given
delays in relevant approvals
Source: Company fillings, news and research reports. Exchange rate applied: 1 USD to 1,073 KRW
Notes: 1. HMC, Kia and Hyundai Mobis contributed KRW 5.8 trillion, KRW 2.1 trillion, and KRW 2.6 trillion, respectively to the total acquisition price of KRW 10.6 trillion.
• Analysts had voic ed significant concerns
over the purchase:
It does raise concerns about the company’s
strategy for the use of shareholder capital as
the money could have easily been used to
make buy backs, raise dividends, build
factories, or increase R&D outlay. The new
headquarters building itself is unlikely to yield
any meaningful economic value until 2022
Deutsche Bank, September 18, 2014
We read the event of HMG paying W10.6trn
for a landsite for a new HQ as multiple de-
rating catalyst; this is not ROE accretive
investment… The KRW10.6trn price tag for
79K square-meters (or cUS$135K per unit)
was well beyond the market’s expectation
(cKRW4trn). Further, we estimate cKRW5-
6trn of additional development cost incl. HQ
bldg., so our back-of-the-envelope total capex
is ~KRW15-6trn; it cost KRW1.1-1.2trn to build
a factory of 300K units capacity, so the amount
is equivalent to 4.2-4.5mn capacity
Citi, September 19, 2014
7
Shortcomings of the HMG
Restructuring Plan

8
The proposed spin-off merger lacks clear business logic

1. After the spin-off, the remaining Mobis will own the core parts business, overseas module manufacturing and overseas after-sales services
businesses as well as investments in affiliates (HMC, Hyundai E&C, etc.)

2. Meanwhile, the spun-off Mobis that is to be merged with Glovis will own the domestic module and domestic after-sales services businesses and
KRW 2.5 trillion of cash and equivalents

• We are not convinced by the business rationale provided to support separating the module manufacturing and after-sales servic es businesses
from the international subsidiaries in the same business lines

• The segregation of the domestic operations from international operations for these two businesses creates a risk of weakening their competitive
positioning and resulting diseconomies of scale

• No business rationale was provided for KRW 2.5 trillion of cash and equivalents assumed to be in the spun-off entity to be merged with Glovis .
Splitting cash and equivalent based on asset split (excluding investment securities) is not a business rationale

3. As Mobis’s shareholder, we find splitting the highly profitable and cash generative after-sales services business and merging with a logis tics
company (Glovis) not convincing

• We found no comparable precedents for an after-sale service business combining with a logistics company; nor has HMG provided any case
study to persuade us otherwise

• Mobis has yet to present any quantifiable synergies for combining Glovis and Mobis’s module manufacturing and after-sales services businesses

9
The mid- to long-term vision for remaining Mobis is at best unconvincing

• Mobis announced its mid- to long-term vis ion for the remaining Mobis on 26 April 2018, in whic h the Management provided the market with very
ambitious revenue growth targets with limited specifics on execution

• Management guided for remaining Mobis ’s overall revenue to ris e from KRW 25 trillion in 2018 to KRW 44 trillion by 2025 (implied CAGR of 8%)
through organic growth

• However, giv en HMG’s own growth outlook and Mobis’s progress on its expansion to non-captiv e customers so far, much more details are
needed for shareholders to assess the feasibility of such growth targets

• The Company has also failed to explain why the spin-off merger is necessary for Mobis to achieve these targets in its mid- to long-term vision

• Analysts consensus estimate standalone Mobis’s revenue to reach KRW 41 trillion by 2020, representing 3 year CAGR of 5%

• Management has failed to make a convincing case on why spinning out a highly cash generative domestic after-sales services business
(together with KRW 2.5 trillion of cash) is necessary for them to achieve expansion in Mobis’s core parts and future tech businesses

• Meanwhile, Glovis’s 2025 vis ion after merging with Mobis is to reach revenue targets of KRW 40 trillion by 2025, effectiv ely relying on the
acquisition of the spun-off business to fuel growth

• Analysts consensus estimate standalone Glovis’s revenue to reach KRW 18.5 trillion by 2020, representing 3 year CAGR of 4%

10
The independent valuation of Mobis’s spun-off business is based on a questionable set of
assumptions

• According to the relevant Korean capital market rules, the intrinsic value of Mobis’s spun-off business (which is used for determining the merger ratio) is
based on a prescribed formula of 1 : 1.5 net asset value to profit value

• Given the rigidity of the rules, we will withhold the critique that ONE times price-to-book for an asset-light business (mostly after-sales service) generating
24% ROE is far too low (resulting in net asset value of only KRW 4.5 trillion vs. PwC’s profit value of KRW 12.4 trillion)

• However, even the assumptions behind the profit value of KRW 12.4 trillion (based on a DCF valuation by Samil PwC) have significant technical
discrepancies worth highlighting:

PwC’s assumptions PwC’s rationale Issues and recommendations

• As PwC is using a nominal WACC of 12.58% , applying a real growth rate

• PwC’s valuation report assumes that HMG’s s ales
1. A real perpetual growth rate of 1% vs. volume growth up to 2022 will be approximately
nominal WACC of 12.58% 1% (bas ed on IHS estimates), implying that a 1%
perpetual growth rate is in real terms
is technically incorrect
• As shown i n the PwC report, CPI of South Korea is anticipated to be ~1.5-2%
in the next 5 y ears (bas ed on Ec onomic Intelligence Unit estimates), s o a
nominal p erpetual growth of 2.5-3% is mor e reasonable t aking into
account both volume growth and inflation

• Bloomberg’s ERP estim ate for Korea is very volatile – it incr eased from
8.45% in 2Q17 to 11.38% in 4Q17 in just 2 quarters

• 11.38% was the highest ERP estimate in 20 quarters, since 2013

• Based on risk-free rate of 2.47% (10Y Kor ea
gov ernment bond), the v aluation ass umes
Korea’s equity r isk prem ium (“ERP”) of
2. WACC of 12.58%
11.38% (Bloomberg’s 4Q 17 estim ates) and
levered beta of 1.26 bas ed on 70/30 equity/debt
capital structure
• The volatility is due to Bl oomberg’s m ethodology of taking c ons ens us EPS
growth in the furthest available period (e.g. 2021E and 2022E for Samsung
Electronics) as perpetual growth rate. This contrasts significantly to PWC’s
real perpetual growth rate of 1%
• As an alternative (to normalize the vol atility), the L 1Y to L 5Y aver age ERP for
Korea is 9.94%, 9.60%, 9.59%, 9.61% and 9.61%, respectively
• There are many prec edents where av erage v alues were us ed including the
acquisition of Wisco by Hyunda Wia in 2014

• Based on revised assumptions of 2.5% perpetual growth rate and 11.0% - 11.3% WACC (i.e. 9.6% - 9.9% ERP), the profit value of Mobis’s spun-off
business would be KRW 15.0 ~ 15.5 trillion

• The profit value implies a 62% ~ 67% premium to the current proposed valuation of KRW 9.3 trillion
Source: PwC’s valuation report published on 28 March 2018 and market data.

11
The resulting valuation significantly undervalues MOBIS’s spun-off business…

Mobis Mobis Mobis Glovis Global auto parts

(KRWbn) (pre spin-off) (remaining business) (spun-off business) (pre-merger) peers’ average1
1• Although Mobis’s spun-off business
Pre-announcement market price (KRW) 261,500
represents 54% of pre-tax inc ome in
Merger price (KRW) 452,523 154,911
FY17, the implied v aluation of the s pun-
off business at KRW 9.3 trillion only Equity value (excl. treasury) 24,764 15,493 9,271 5,809
(based on (market value - (based on (based on
represents 37% of the pre-
market value) merger value) merger value) merger value)
announc ement market v alue of Mobis.
The Company has been unabl e to
explai n the stark differenc e i n the Net debt / (cash) (6,030) (3,879) (2,151) 300
implied FY17 P/E multi ple of 16.4x for Affiliates (30% discount)2 (6,000) (6,000) (326)
the rem aining Mobis as compared to Minority interests 64 64
8.5x of the spun-off businesses des pite Enterprise value 12,798 5,678 7,121 5,784
the latter’s higher profitability in FY17
Valuation metrics:
2• While Mobis’s spun-off business (with a FY17A financials:
net margin of 7.8% and ROE of 24.0% Revenue 35,145 26,770 14,010 16,358
in FY17) is m ore profitable than Gl ovis EBITDA 2,732 1,100 1,469 894
(with a net margin of 4.1% and ROE of Pre-tax profit 2,734 1,250 1,440 889
16.9% in FY17), the propos ed terms Net income (assumes 24.2% tax rate
value M obis’s spun-off business at a 2,073 948 1,092 674
for illustration)3
similar FY17 P/E multipl e of 8.5x (or % net margin 5.9% 3.5% 7.8% 4.1% 4.9%
6.2x P/E excluding cas h) and % ROE (based on 2017 net assets) 9.8% 5.7% 24.0% 16.9% 15.8%
EV/EBITDA m ultiple of 4.8x, as Forward financials4 :
compared to Gl ovis’s 8.6x P/E and 6.5x
Revenue 37,736 29,320 14,466 17,336
EV/EBITDA
EBITDA 3,309 1,789 1,520 974
Net income 2,660 1,583 1,077 590
3• Similarly, valuation of Mobis’s s pun-off % net margin 7.0% 5.4% 7.4% 3.4% 5.8%
business is als o signific antly l ower than
auto parts peers’ average of P/E of 1 2
Implied FY17 P/E 11.9x 16.4x 8.5x 8.6x 14.3x
12.5x and EV/EBITDA 6.5x 3
Implied forward P/E 9.3x 9.8x 8.6x 9.8x 12.5x
Implied FY17 EV/EBITDA 4.7x 5.2x 4.8x 6.5x 8.0x
3
Implied forward EV/EBITDA 3.9x 3.2x 4.7x 5.9x 6.5x

Source: Company fillings and IR materials, market data

Notes: 1. Global auto parts peers include Mando, Hanon, Denso, Aisin Seiki, Continental, Valeo, Brembo, Magna, Autoliv and Tenneco.
2. Based on page 5 of the FAQ materials published by Mobis on 18 April 2018.
3. Excluding the impact of origination and reversal of temporary differences in tax expenses (KRW497.5 billion), the effective tax rate in 2017 was 24.0%.
4. Based o n cons ensus estim ates as of 28 M arch 2 018 ( pre-a nno unc ement d ate). Forward i ntra-segm ent reve nue assume to b e the sam e % of sal es as FY17A. Forwar d net inc ome of Hy und ai Mo bis’s s pun- off busin ess bas ed o n comp any’s for ecast
operating profit after tax, while the remaining income vs. forward consensus net income is attributed to the remaining business of Hyundai Mobis.

12
…as compared to Remaining Mobis, Glovis, or Global Peers’ averages

• The following chart shows the implied P/E (ex-cash) of Mobis’s spun-off business as compared to peers’ average of 12.5x. At a more reasonable
DCF valuation of KRW 15.5 trillion as outlined on page 11, the implied P/E of Mobis’s spun-off business would be 11.9x, whic h is in line with peers’
average of 12.5x

• Given that (i) most of the global auto parts peers have a net debt position, and (ii) the lack of business rationale provided to support KRW 2.5
trillion of cash in the spun-off entity, we believe ex-cash P/E is more representative in comparing the valuation of Mobis ’s spun-off businesses
with remaining Mobis, Glovis or global peers

Implied P/E of Mobis's spun-off and remaining business (ex-cash)

14.0x

Peers' average: 12.5x

12.0x 11.9x 11.7x

Undervaluation:
10.0x
-40% 9.0x
KRW 6.2 tn
8.0x US $5.7 bn

6.2x
6.0x

4.0x

2.0x

0.0x
Current merger valuation Profit value by PwC Profit value based on more reasonable Remaining Mobis
(W9.3tn) (W12.4tn) assumptions (ex-cash) 1
(W15.5tn)

Source: Company fillings, market data

Notes: 1. Excluding cash and equivalents of KRW 4.4 trillion of remaining Mobis.

13
Will Mobis suffer the same fate as Samsung C&T?

Share price performance since announcement of HMG Restructuring Plan1

105

+2%

100

95 -13%
?
90
28th March 18th April 26th April 2nd May
Mobis and Glovis
announces HMG
Mobis releases further
materials to support the
Mobis presents its
mid-to long-term
Mobis announces
token share buyback
-11%
Restructuring Plan calculation of spin-off vision and cancellation of
merger ratio existing treasury
shares

85
3/28/2018 4/4/2018 4/11/2018 4/18/2018 4/25/2018 5/2/2018 5/9/2018 5/16/2018 5/23/2018 5/30/2018

Mobis KOSPI

Source: Market data

Notes: 1. Local currency share price performance indexed to 100.

14
Conclusion

• An inflexible statutory formula does not replace directors’ fiduciary duty to carefully review and assess the proposed terms and
conditions of the spin-off and merger, with a view to maximizing the company’s interest and in turn shareholder value

• Elliott emphasizes again that the proposed terms of the spin-off and the merger ratio do not ascribe fair value to Mobis’s module
manufacturing and after-sales services businesses

• The unfairness of the transaction is only one of the many factors that have weighed negatively on HMG’s share price

• Measures adopted so far by HMG in relation to shareholder buyback and cancellation of existing treasury shares are token and do not go
far enough to address the broader issues of suboptimal balance sheets, declining shareholder returns and corporate governance that is
below global standards

• HMC’s buyback of KRW 415 billion represents only 7% of KRW 6 trillion of excess cash balance and 1% of its pre-announcement market
cap1

• Mobis’s announced buyback of KRW 187.5 billion over 3 years starting from 2019 or KRW 62.5 billon annually only represents a 2%
increase in payout ratio based on consensus net income, and is only 3% of KRW 6 trillion of excess cash and 1% of pre-announcement
market cap2

• Elliott cannot support the HMG Restructuring Plan on an as-is basis, which fails to treat all shareholders equally

• Elliott calls on the Hyundai Motor Group to revise its proposed transaction to adopt a holding company structure, and to implement a more
comprehensive set of measures that optimize balance sheets, improve shareholder returns policy to be in line with global peers, and reform
its board structure and articles to reflect its status as a leading global automotive brand

Source: Company fillings, market data

Notes: 1. Market cap as of 26 April 2018.
2. Market cap as of 1 May 2018.

15
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