[Click eStock] "Hyosung Advanced Materials, Carbon Fiber Growth Potential... Target Price Up"

Shinhan Investment Corp. raised the target price for Hyosung Advanced Materials from 500,000 KRW to 610,000 KRW on the 3rd. This reflects the operating value based on the growth potential of carbon fiber.

Hyosung Advanced Materials Jeonju Plant Panorama

Carbon fiber is a fiber with a carbon content of over 90%. Its strength is about 10 times that of steel, while its weight is only 20%. It is used in fields where steel is replaced and weight reduction is essential, such as wind power, aerospace, and high-pressure vessels.

Global demand for carbon fiber was 129,000 tons in 2021, growing at an average annual rate of about 11% over the previous six years. Annual growth of 14% is expected until 2025. Despite increasing demand, global supply is projected to grow by only 8% annually until 2025, creating a tight supply-demand situation.

Hyosung Advanced Materials' production capacity is expected to expand from 65,000 tons in 2022 to 140,000 tons in 2025, an average annual growth rate of 29%. Due to rising demand, prices remain at a high level. In particular, aggressive expansion of solar power facilities in China is causing a surge in related demand, and market share is expected to increase. China accounts for 41% of global carbon fiber demand.

Hyosung Advanced Materials' carbon fiber sales in 2022 are estimated at 130 billion KRW, with an operating profit margin of about 18%. Based on aggressive capacity expansion each year, sales and operating profit are expected to grow annually by 45% and 56%, respectively, until 2025. This year, the operating value of carbon fiber is expected to be around 1.1 trillion KRW.

Jinmyung Lee, Senior Researcher at Shinhan Investment Corp., said, "We raised the target price reflecting the value of carbon fiber," adding, "Using cash flow secured through global No. 1 competitiveness in tire reinforcement materials, the company has expanded investments in special materials, and as the profit contribution of businesses with high growth potential and profitability increases, stock price revaluation will continue."