[Click eStock] "Hyosung TNC, China Reopening Expectations... 1Q Profit Forecast"

Hana Securities Report

Hana Securities forecasted on the 27th that Hyosung TNC's performance will improve due to the rise in exchange rates and domestic demand recovery following China's reopening. The investment opinion was maintained as 'Buy,' and the target price was raised from 440,000 KRW to 530,000 KRW.

Yoon Jae-sung, a researcher at Hana Securities, analyzed, "Hyosung TNC's operating profit for the first quarter of this year is expected to be 43.3 billion KRW, a 77% decrease compared to the previous year, but it will exceed the consensus (22 billion KRW) by twice," adding, "Operating profits from Spandex and Polytetramethylene Glycol (PTMG) are expected to turn positive to 24.3 billion KRW after three quarters."

Along with the rise in exchange rates, sales volume is expected to increase by about 8-9% compared to the previous quarter due to domestic demand recovery following China's reopening despite the impact of the Chinese Lunar New Year. The 36,000-ton facility in Ningxia, China, completed early last year, contributed to the volume increase by raising its operating rate to 80% from early February this year. On the other hand, the raw material butanediol (BDO) reflected a low level due to a 1-2 month input lag, according to the analysis.

Operating profit for the second quarter is estimated at 68.9 billion KRW, a 21% decrease compared to the previous year but a 59% increase compared to the previous quarter. The easing of price pressures centered on China and India is seen as a factor for gradual demand improvement as well as an element that can raise expectations for policies aimed at economic stimulus. In particular, the 36,000-ton Ningxia facility in China has maintained an 80% operating rate since February and is expected to be fully operational in the second quarter.

The Spandex plant in India also draws attention. Researcher Yoon said, "Its production capacity share in the company has started to exceed 10%," and added, "It is time to reflect the value of Hyosung TNC's 60% market share in the Indian Spandex market and its mid- to long-term growth potential in the valuation."