[Click eStock] "Hyosung TNC, Stock Undervalued Due to Excessive Concerns"

On the 23rd, NH Investment & Securities maintained a target price of 490,000 KRW and a buy rating for Hyosung TNC, stating that "the current stock price reflects excessive concerns and is undervalued."

Choi Young-kwang, a researcher at NH Investment & Securities, said, "The recent stock price weakness is due to the overall deterioration of investment sentiment in the petrochemical sector, recession concerns, and performance slowdown worries caused by weak indicators related to Chinese spandex." He added, "The top-tier spandex companies are showing signs of recovery in their earnings, and the stock prices of comparable Chinese companies remain relatively strong, leading to an expanded price gap between Hyosung TNC and Hwapyung Chemical. I expect Hyosung TNC's stock price to rebound reflecting improved earnings trends, and now that its investment appeal has increased, it is judged to be the right time to buy."

Investors are concerned about earnings slowdown due to increased spandex inventory days and continued price weakness in China. However, despite weak Chinese indicators, earnings have improved since the low point in 2022. The company recorded a surprise in Q1 2024 and earnings in line with consensus in Q2. Based on increased sales volume, inventory days have decreased to less than 30 days.

With global No.1 competitiveness, diversification of facility locations, spandex capacity expansion, and an increased proportion of high value-added products, earnings improvement is expected to continue through 2025. Due to higher ocean freight rates, spandex demand and price strength are rising outside China, and considering forward industry indicators such as reduced inventory levels of global apparel brands and Chinese fabric companies, there is ample potential for further demand improvement.