[Click eStock] "Kolon Industries, Operating Profit Expected to Increase 17% in 2025"

Amid the recovery in the aramid sector (used in communication cable sheathing, automotive brake pads, etc.), securities analysts predict that Kolon Industries' operating profit in 2025 will increase by 17% compared to the previous year.

Hwang Kyu-won, a researcher at Yuanta Securities, stated, "Attention should be paid to the fact that the core growth driver, the aramid fiber sector, has begun to recover," and projected the profit estimates by division as ▲Industrial Materials 121.8 billion KRW ▲Chemicals 79.9 billion KRW ▲Fashion 24.9 billion KRW ▲Film & Others -34.9 billion KRW."

Kolon Industries' ultra-strong aramid fiber production capacity (CAPA) is 15,000 tons, ranking third in the world, making the aramid fiber sector directly linked to its performance.

Researcher Hwang forecasted, "Global demand for aramid fiber (total demand 120,000 tons) is expected to decline slightly by about 1% in 2024, followed by a 5% growth in 2025," adding, "Demand for cable sheathing materials is expected to recover due to the U.S. BEAD Act (a 60 trillion KRW support for communication network expansion) and China's investment in 5G-A communication networks in 300 cities."

He further noted, "The burden of new capacity additions will decrease from 11,000 tons in 2024 to 3,500 tons in 2025," and added, "This is accompanied by the closure of Teijin's 1,500-ton plant in the Netherlands, the world's second-largest producer, and Taekwang Industrial's announcement to postpone a 3,500-ton expansion in Korea."

Kolon Industries is expected to see improved cash flow this year due to the recovery in the aramid sector and the completion of restructuring. Last year, it completed three restructuring initiatives: spinning off the loss-making PET film business, organizing outdated golf wear, and integrating the car seat business.

Researcher Hwang said, "The projected performance for 2025 is sales of 4.8 trillion KRW and operating profit of 191.7 billion KRW, a 17% increase from the previous year," and maintained a buy rating with a target stock price of 70,000 KRW.