[Click eStock] "Hyosung TNC, Global No.1 Firm Despite Spandex Expansion Competition"

[Asia Economy Reporter Kwon Jae-hee] Shinhan Financial Investment maintained a buy rating on Hyosung TNC on the 27th despite competitors expanding spandex capacity this year. This is based on the judgment that Hyosung TNC, as the global market leader in spandex, will face limited price declines. However, due to weak market conditions and disappointing performance, the target price was lowered to 800,000 KRW.

Hyosung TNC's operating profit in the fourth quarter of last year was 355.9 billion KRW, down 18% from the previous quarter. This figure also fell short of the market forecast of 395.6 billion KRW.

Lee Jin-myung, a researcher at Shinhan Financial Investment, analyzed, "This is attributed to the operating profit of Hyosung TNC's core business, spandex/PTMG, which recorded 344.4 billion KRW (-18%) due to a 10% decrease in sales volume and a narrowing spread."

The outlook for this year is also not optimistic. Shinhan Financial Investment expects Hyosung TNC's operating profit in the first quarter to be 277.3 billion KRW, a 23% decrease from the previous quarter. Sales and operating profit of spandex/PTMG are expected to decline by 7% and 24%, respectively, compared to the previous quarter. Despite a 5% increase in sales volume due to capacity expansion and recovery in Chinese demand, a narrowing spread is anticipated due to price declines and the use of some high-cost raw materials.

However, Hyosung TNC holds the number one global market share in spandex (32%), and with a higher proportion of premium products compared to competitors, the price decline is expected to be limited.