[Click eStock] "Nexen Tire, Q4 Earnings Slump... Target Price Down"

Target Price Lowered from 9,700 Won to 6,100 Won

Kiwoom Securities estimated on the 21st that Nexen Tire's fourth-quarter performance last year likely fell short of market expectations. The target stock price was lowered from 9,700 won to 6,100 won.

Yoonchul Shin, a researcher at Kiwoom Securities, judged that Nexen Tire probably did not achieve the annual performance guidance of 2.9 trillion won in sales and a 10% operating profit margin. It is estimated that Nexen Tire recorded sales of 713.6 billion won and an operating profit of 20 billion won in the fourth quarter of last year. Sales increased by 5.2% compared to the same period last year, but operating profit decreased by 68.8%. This is below the market expectations of 742.9 billion won in sales and 52.7 billion won in operating profit.

Researcher Shin explained, "The operating rate of Nexen Tire's Czech 2nd factory has risen to the 50% range, and ramp-up (increase in production volume) is progressing smoothly," but added, "Factors worsening performance, such as rising manufacturing costs and the bankruptcy of a recycled (RE) tire client, overlapped."

Researcher Shin suggested that as an alternative measure to enhance corporate value, Nexen Tire should take a different approach from competitors in areas beyond performance. He emphasized, "Since Nexen Tire recently underwent a complete management overhaul, it is also a time when change can be pursued," and added, "To consider upgrading the investment opinion, active investor communication by Nexen Tire's management compared to competitors is necessary." He further stated, "It will be necessary to confirm the willingness to enhance corporate value in the mid-to-long term and the establishment of concrete plans."