[Click eStock] "Hankook Tire & Technology, Performance Improvement Will Continue"

[Asia Economy Reporter Lee Jung-yoon] Korea Investment & Securities maintained a buy rating and a target price of 53,000 KRW for Hankook Tire & Technology on the 3rd, forecasting continued improvement in its earnings.

Hankook Tire & Technology's sales in the fourth quarter of last year increased by 19.9% year-on-year to 2.2638 trillion KRW, and operating profit rose by 140.1% to 212 billion KRW.

While the new car tire (OE) market grew due to the easing of vehicle semiconductor issues, demand for replacement tires (RE) in major markets declined due to mild winter weather and weakened consumer sentiment.

By region, domestic sales increased by 25%, Europe and North America rose by 17.9% and 38.4% respectively, whereas China decreased by 0.9%. The input cost in the fourth quarter was 1,991 USD, and it is expected to be 1,925 USD in the first quarter of this year.

This year's sales guidance targets a 5% increase, with a goal of 45% sales proportion for tires 18 inches and above, and a 20% target for electric vehicle tire share. Labor costs are declining but are reflected in costs with a time lag. Material and labor costs continue to have a positive effect on costs. Inventory has been gradually decreasing since peaking in October last year as logistics difficulties ease and customer orders increase. The guerrilla strike led by the Korean Confederation of Trade Unions was withdrawn, and wage negotiations are ongoing separately.

Jinwoo Kim, a researcher at Korea Investment & Securities, said, "Despite the guerrilla strike in the fourth quarter, strong earnings were recorded, and tier 1 competitors such as Michelin and Bridgestone raised prices in December last year, leading Hankook Tire & Technology to resume price increases last month," adding, "Demand concerns due to the recession are expected to be offset." He further added, "With the end of the strike, reduced inventory burden, price increases, and declines in material and logistics costs, the earnings improvement trend is expected to continue."