[Click eStock] “Hyosung Advanced Materials, 1Q Improvement Expected Across All Business Divisions”

NH Investment & Securities Report

[Asia Economy Reporter Kwangho Lee] NH Investment & Securities forecasted that Hyosung Advanced Materials' performance in all business sectors will improve in the first quarter of this year. Accordingly, they maintained a 'Buy' investment rating and a target price of 510,000 KRW. The closing price on the previous day was 383,500 KRW.

Researcher Youngkwang Choi of NH Investment & Securities diagnosed, "Hyosung Advanced Materials' sales in the fourth quarter of last year recorded 837.9 billion KRW, down 14.1% from the previous quarter, and operating profit decreased by 24.6% to 49.8 billion KRW."

The Industrial Materials division's sales fell 14.4% from the previous quarter to 722.7 billion KRW, and operating profit dropped 33.3% to 55.4 billion KRW, leading to poor performance. This was largely due to a decrease in sales volume caused by the seasonal off-season for tire cords, accompanied by a decline in selling prices.

The Superfiber division continued its upward trend as the carbon fiber expansion volume, which began operation in the third quarter, was reflected. However, sales decreased by 6% compared to the previous quarter due to an increase in the proportion of low-efficiency aramid products and the impact of exchange rate declines.

Other divisions recorded sales of 115.1 billion KRW, down 12.3% from the previous quarter, and continued to post an operating loss of 5.7 billion KRW. While spandex prices rose 0.7% from the previous quarter, the spread improved due to a decline in raw material prices, reducing the deficit.

In the first quarter, it is expected that the Industrial Materials operating profit margin will recover as it enters the tire cord peak season. The production subsidiaries are located overseas, so there is a gap between export unit prices and tire cord selling prices. However, it is understood that prices were raised in the first quarter.

Researcher Choi emphasized, "Carbon fiber continues to improve profitability based on steady price increases, and with the reduction of spandex losses, performance improvement is expected across all business sectors."