[Click e Stocks] "Hyosung TNC is Passing Through the Worst Phase"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Hi Investment & Securities maintained a 'Buy' rating and a target price of 470,000 KRW for Hyosung TNC on the 11th.

Hyosung TNC's operating loss for the fourth quarter is expected to be -79.4 billion KRW, falling short of the market forecast of -55.5 billion KRW. This is due to the continued lockdown measures in China and the resulting slowdown in the spandex market, which is expected to cause a loss of -104.9 billion KRW in the textile sector. However, some inventory losses incurred in the previous quarter are expected to be partially reversed, slightly reducing the scale of the operating loss compared to the previous quarter.

Although the spandex market remains challenging, it is moving away from the worst phase.

Researcher Jeon Yoo-jin of Hi Investment & Securities explained, "The spandex industry has clearly moved away from its worst phase since the bottom in the third quarter of 2022," adding, "Inventory, which had increased to around 50 days last August, has recently decreased to about 35 days due to production rate adjustments by Chinese companies, and the gradual slowdown in the decline of spandex prices also supports this."

In particular, Hyosung TNC holds the largest market share globally, and with competitors delaying or withdrawing expansion plans, the benefits of a spandex market rebound are expected to be concentrated among the top companies.

Researcher Jeon said, "Among domestic petrochemical companies, Hyosung TNC is one of the firms expected to benefit the most from China's reopening," and analyzed, "The reopening effect depends on the calming of COVID-19 cases in China, but since it is ultimately a matter of time, relatively higher benefits compared to competitors are expected when the market recovers."