Hyosung TNC Soars Over 4 Times This Year... "Going Further"

Brokerage Target Prices Raised... Forecast Up to 1.28 Million Won
"Spandex Supply Still Tight... Strong Performance Expected in Second Half"

[Asia Economy Reporter Minwoo Lee] Analysis suggests that Hyosung TNC's stock price, which has already risen more than fourfold this year, still has room to grow. This is based on the expectation that concerns over the slowdown in the spandex market, the company's main product, are being resolved, and that supply remains insufficient, leading to a forecast of steady performance continuing through the second half of the year.

According to the industry on the 10th, securities firms are raising their target prices for Hyosung TNC one after another. KB Securities raised its target from 917,000 KRW to 1,090,000 KRW, an 18.87% increase. Daishin Securities also raised its target from 1,000,000 KRW to 1,150,000 KRW, a 15% increase. Kiwoom Securities even suggested a target price as high as 1,285,000 KRW, up 11.74%. As of 9:37 AM on the same day, Hyosung TNC's stock price was 887,000 KRW. This is already more than four times higher than the closing price of 213,000 KRW on January 4, the beginning of the year. Despite this, it is expected that the stock price could rise by more than 10% from the current level.

The securities industry expects Hyosung TNC to continue delivering strong earnings. According to financial information provider FnGuide, the market consensus for Hyosung TNC's consolidated earnings in the second quarter of this year is sales of 1.84 trillion KRW and operating profit of 315.7 billion KRW. Sales are estimated to increase by 82.9% year-on-year, and operating loss is expected to turn into profit. Compared to the previous quarter, these figures represent increases of 13.7% and 27.9%, respectively.

Hyosung TNC Turkish Spandex Factory Exterior View

The potential for continued high growth in spandex, the company's main product, was highly valued. KB Securities forecasted that Hyosung TNC's spandex operating profit would rise 22.5% quarter-on-quarter to 261 billion KRW. This is attributed to a roughly 30% increase in spot prices and an estimated increase in sales volume compared to the previous quarter. Additionally, operating profit from trade and other businesses is estimated to increase 113.1% quarter-on-quarter to 42.4 billion KRW, due to improved tire cord performance at the Vietnam subsidiary and increased profits from nitrogen trifluoride (NF3).

It is expected that this record quarterly performance will continue through the third quarter. The third-quarter spandex operating profit is forecasted to slightly increase to 263 billion KRW compared to the previous quarter. Baek Young-chan, a researcher at KB Securities, said, "Even assuming stable spandex spot prices in the third quarter, profitability could improve due to a decline in raw material prices," adding, "Strong spandex supply-demand tightness is expected to continue until the first half of next year, so strong performance will persist."

"Although spandex spot prices temporarily fell after a new 30,000-ton capacity expansion by a Chinese company in March, they turned strong again from May due to increased demand," he explained, "and record quarterly performance is expected to continue through the third quarter."