[Click eStock] Hyosung TNC, China Lockdown Lifted Signals Buy Timing

[Asia Economy Reporter Junho Hwang] Daishin Securities lowered the target price of Hyosung TNC from 900,000 KRW to 650,000 KRW on the 2nd.

Hyosung TNC's operating profit for the first quarter of this year was 190.1 billion KRW, down 23% compared to the previous year. It fell short of market expectations by about 20%. The Spandex/PTMG operating profit recorded 161.6 billion KRW, a 52% decrease from the previous year. Due to the low season of the Chinese Lunar New Year, along with the Beijing Olympics causing a decline in the operating rate of upstream companies, lockdowns, and a price drop (down 15% compared to the previous quarter) occurred. In the first quarter of this year, raw material BDO was input at a level 4% higher than the previous quarter, and the operating profit margin shrank by 16% compared to the previous quarter, recording 17.7%.

On the other hand, trade/other operating profit significantly improved by 49% compared to the previous quarter to 28.9 billion KRW. Trade showed favorable results due to increased steel sales volume to Europe and rising chemical prices, and NF3 is estimated to have achieved last year's annual performance in just this one quarter due to a significant increase in margin.

Hana Financial Investment expects the operating profit for the second quarter of this year to rise 11% from the first quarter to 210.6 billion KRW.

Yoon Jaesung, a researcher at Hana Financial Investment, stated, "Due to the revision of the 2022 profit estimates caused by the Chinese lockdown, the target price is also lowered from the previous 900,000 KRW to 650,000 KRW," adding, "Considering the reopening benefits after the lifting of the Chinese lockdown measures, the effect of increased sales of deferred volumes will appear, and the annual effects of self-expansion of 9,000 tons in Brazil, 36,000 tons in Ningxia, China, and 15,000 tons in India in the second half will be maximized and reflected."