[Click e Stocks] "Kolon Industries, Growing Expectations for Hydrogen"

[Asia Economy Reporter Song Hwajeong] Shinhan Financial Investment maintained its 'Buy' rating and target price of 110,000 KRW for Kolon Industries on the 27th, expecting that the performance improvement centered on industrial materials in the second half of the year will continue, and that hydrogen-related optimism will gradually expand due to the expansion of hydrogen materials.

Kolon Industries' operating profit in the third quarter is expected to increase significantly compared to the same period last year. Shinhan Financial Investment estimated that Kolon Industries' third-quarter operating profit will reach 83.5 billion KRW, a 191% increase year-on-year. Researcher Lee Jinmyung of Shinhan Financial Investment explained, "The performance improvement will continue due to the price increase of tire cords caused by tight supply and demand," adding, "The subsidiary Kolon Plastics is also expected to achieve its highest quarterly performance due to price increases driven by strong front-end demand." The export price of PET tire cords in August was $3,890 per ton, a 35% increase compared to the same period last year. This level is similar to that of past boom periods.

The fashion sector is expected to significantly reduce its deficit compared to the same period last year due to strong sales centered on golf apparel and cost reductions. The chemical segment is expected to see strength in epoxy and phenol resins and a decline in costs, while the film segment is expected to achieve results similar to the previous quarter.

Hydrogen materials are expected to establish themselves as a new growth engine in the future. Researcher Lee said, "Kolon Industries will concretize the expansion of hydrogen materials such as moisture control devices and membrane electrode assemblies (MEA) within the third quarter," adding, "The plan is to complete construction by the second half of next year, with an expected investment amount of around 30 billion KRW." The moisture control device expansion is to respond to Hyundai Motor's order volume supplied in the second half of 2023. Lee analyzed, "The MEA expansion is considered part of an investment aimed at supplying fuel cells for buildings and power generation starting next year, as well as future vehicle MEA," and added, "The MEA market is expected to explode from 3 trillion KRW in 2025 to 18 trillion KRW in 2030, so additional expansions are also possible."