[Click eStock] Hyosung Earnings Slump Concerns... Target Price Downward Revision

3Q Operating Profit 175.8 Billion KRW... 274% Growth YoY but Below Expectations
Hyosung TNS Posts Deficit... Impact of Hyosung Heavy Industries and Hyosung Chemical Weakness
Hyosung TNC Inevitably Lower Profit... Must Rely on Future Business Prospects

[Asia Economy Reporter Minwoo Lee] Hyosung posted disappointing results for the third quarter of this year. This is attributed to the sluggish performance of some affiliates that had been on an upward trajectory.

On the 4th, Daishin Securities lowered Hyosung's target stock price by 12.5% to 140,000 KRW. The previous day's closing price was 100,000 KRW. The investment rating of 'Buy' was maintained. It was explained that this reflects a decrease in the base value due to the decline in the stock prices of its affiliated companies.

Hyosung recorded consolidated sales of 861.3 billion KRW and operating profit of 175.8 billion KRW in the third quarter of this year. These figures represent increases of 25.9% and 274.2%, respectively, compared to the same period last year. Nevertheless, the operating profit fell short of market expectations (consensus) by 16.1%. This is attributed to Hyosung TNS, a consolidated subsidiary, posting an operating loss of 7.1 billion KRW, as well as the poor performance of equity-method subsidiaries Hyosung Heavy Industries and Hyosung Chemical.

Hyosung TNS recorded an operating loss due to increased costs from rising ocean freight rates and sluggish local sales in the U.S. caused by the COVID-19 Delta variant. Hyosung Chemical also showed poor performance as losses increased at its Vietnam subsidiary and one-time expenses such as fire repairs rose. Hyosung Heavy Industries fell short of market expectations due to deferred sales caused by the spread of COVID-19.

Jisoo Lee, a researcher at Daishin Securities, said, "The performance of Hyosung TNS, Hyosung Heavy Industries, and Hyosung Chemical is expected to recover from the fourth quarter, but a decline in earnings for Hyosung TNC, which enjoyed a spandex boom this year, is inevitable," adding, "Investors should place their hopes on future businesses such as the hydrogen economy and data centers, as well as dividends, rather than short-term performance."