[Asia Economy Reporter Park Jihwan] The major affiliates of Hyosung Group have seen their stock prices rise by an average of over 30% this month, showing strong performance. This is due to expectations that the demand for key products such as petrochemicals will surge with the full-scale economic recovery, leading to a clear increase in annual earnings.
According to the Korea Exchange on the 31st, Hyosung Chemical's stock price rose 37.3% from the beginning of this month until the previous day. Hyosung TNC and Hyosung Advanced Materials also increased by 35.8% and 30.1%, respectively. The average increase in stock prices for these three companies reached 34.4%. Considering that the KOSPI rose only 1.9% during the same period, this represents a rise more than 18 times the market return.
The sharp rise in stock prices of Hyosung Group affiliates is due to the growing possibility of improved earnings driven by increased demand for key petrochemical products such as textiles, chemicals, and tire cords, following the global economic recovery and the resumption of industrial activities.
Hyosung Chemical was affected by a sharp price increase in its main product, polypropylene (PP), due to a combination of rising demand and supply disruptions. Currently, in the US and Europe, price surges caused by supply shortages have widened the price gap between PP in the US, Europe, and Asia by more than $700 to $1,000 per ton. Kiwoom Securities analyst Lee Dongwook said, "A tight supply and demand situation is occurring for PP, so Hyosung Chemical is expected to expand exports to regions such as Europe and the US where PP prices have surged," adding, "Operating profit in this business segment is expected to increase by 523.6% compared to the same period last year." Kiwoom Securities forecasts that Hyosung Chemical's operating profit in the first quarter of this year will rise to 45 billion KRW, which is 73.8% of last year's total operating profit.
In the case of Hyosung TNC, it is predicted that the increase in demand and prices for its main textile chemical product, 'Spandex,' will drive earnings growth. Additionally, the lack of significant supply increase plans from competitors until the end of the year is also a positive factor, suggesting that tight supply and demand conditions will continue. Daishin Securities expects Hyosung TNC to record an operating profit of 180.1 billion KRW in the first quarter of this year, significantly exceeding the market expectation of 146.4 billion KRW.
Hyosung Advanced Materials is also seeing rising sales volume and unit prices of its core tire cord business, along with growing expectations for its new carbon fiber business. Shin Young Securities analyst Lee Ji-yeon said, "There is sufficient growth potential as the possibility of supplying hydrogen fuel tanks to Hyundai Motor this year and the full-scale hydrogen economy could greatly increase the supply of carbon fiber for tube trailers."
Target price upgrades from the securities industry are also continuing. According to financial information provider FnGuide, securities firms have raised the target price for Hyosung Chemical by an average of 16% from previous levels to between 350,000 and 430,000 KRW. The average target price for Hyosung TNC increased by 26.5% from the previous 632,167 KRW to a recent 800,000 KRW. Hyosung Advanced Materials also rose by 5.2%, from 428,600 KRW to 450,750 KRW.
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