[Click eStock] Kumho Tire Turns to Deficit Due to Lawsuits and Rising Logistics Costs

[Asia Economy Reporter Hwang Junho] Samsung Securities has lowered the target price of Kumho Tire to 7,000 KRW. The main reason is the turnaround to a deficit due to litigation costs related to labor and logistics expenses.

Kumho Tire recorded a loss in the third quarter of this year due to an increase of 20 billion KRW in litigation provisions and 63.8 billion KRW in logistics costs. Sales increased by 2% year-on-year to 649 billion KRW.

Samsung Securities analyzed that despite the increase in product unit prices, the company's capacity to absorb costs is weak. Researcher Lim Eunyoung stated, "Although we expect a slowdown in logistics costs, reflecting a moderate pace, we lowered the earnings forecast and applied the existing EV/EBITDA multiple of 5.9 times to lower the target price."