[Click eStock] "Kolon Industries Q4 Earnings Expected to Fall Short of Expectations"

Target Price Lowered from 50,000 Won to 41,000 Won

There is a forecast that Kolon Industries' fourth-quarter performance last year will fall short of market expectations. While the chemical sector showed solid profitability, one-time costs occurred in the industrial materials and fashion sectors, according to analysis.

On the 24th, IBK Investment & Securities lowered Kolon Industries' target stock price from 50,000 won to 41,000 won, making this forecast. The securities firm expected Kolon Industries' operating profit for the fourth quarter of last year to be 38.5 billion won, lower than the market expectation of 52.8 billion won. The investment opinion was maintained as 'Buy.'

First, the operating profit of the industrial materials division is expected to be 27 billion won, a 14.6% decrease compared to the previous quarter. In the case of polyester (PET) tire cords, solid profitability continued due to increased winter tire demand, but one-time costs occurred due to the merger with Glotech's automotive materials division. Aramid underwent regular maintenance until October last year.

The chemical division's operating profit is expected to be 19 billion won, a 12.5% decrease compared to the previous quarter. Petroleum resins maintained favorable performance, but the off-season effect is expected for phenol and epoxy resins.

In the fashion division, operating profit is expected to turn positive to 11.3 billion won compared to the previous quarter, but sales decline due to weakened consumer sentiment and the restructuring of low-profit brands are expected to result in performance weaker than the peak season.

Lee Dong-wook, a researcher at IBK Investment & Securities, explained, "Considering the delay in profitability improvement of aramid due to weakening front-end demand and the increase in borrowings due to the acquisition of land and buildings in Seocho by Kolon Global, we lowered the target stock price. However, we maintain the 'Buy' investment opinion considering the prominence of the downstream, hybrid portfolio, and market dominance of key products."