[Click eStock] "Hyosung TNC, Earnings Outlook Far Exceeding Expectations... Target Price Up 11%"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities evaluated that Hyosung TNC's profit improvement trend is rapidly emerging due to margin improvements in major production products, and its performance improvement will significantly exceed market expectations. Accordingly, it maintained a 'Buy' investment rating and raised the target price by 11.1% from the previous 900,000 KRW to 1,000,000 KRW.

Researcher Lee Dongwook of Kiwoom Securities stated, "The margin improvement of spandex and tire cords appears to be stronger than market expectations," adding, "Quarterly and annual performance this year is expected to greatly exceed market expectations."

Hyosung TNC's operating profit for the first quarter of this year is expected to reach 225.7 billion KRW, a 187.5% increase compared to the same period last year. This is about 85% of last year's annual figure of 266.6 billion KRW. It is forecasted to significantly surpass the recently sharply raised market expectation of 179.5 billion KRW.

This is thanks to performance improvements across all business divisions. The textile division's operating profit is expected to be 210.1 billion KRW, a 211.7% increase compared to the same period last year. Due to the input time lag effect, relatively low raw material prices are applied, and a supply-tight situation has occurred, leading to a rapid improvement in the spread and margin of the main product, spandex.

Researcher Lee Dongwook analyzed, "The domestic and overseas spandex plants have maintained a 100% operating rate," and "Performance improvement is expected due to increased sales of differentiated and eco-friendly nylon and polyester yarn products." The trading and other division's operating profit is expected to be 15.6 billion KRW, a 40.5% increase compared to the same period last year. Due to improvements in the automotive and tire industries, sales volume and margins of Vietnamese tire cords surged, and due to tight supply and demand in semiconductors and LCDs, Quanzhou Neochem (NF3) is also estimated to maintain high profitability.

He forecasted, "Operating profit in the second quarter of this year will also see major raw material prices peak and then decline," adding, "BDO prices are falling due to the coal off-season and declines in crude oil and butadiene prices, and the average selling price (ASP) of the company's spandex, which was lower than the Chinese benchmark spot price, is expected to rise."