[Click eStock] Hana Securities "Kolon Industries, Strong Performance Expected This Year... Target Price Up"

Hana Securities on the 24th predicted that Kolon Industries would achieve solid performance this year, focusing on the resin and tire cord businesses. The target stock price was raised from the previous 35,000 KRW to 39,000 KRW, while maintaining a 'Buy' investment rating.

Yoon Jae-sung, a researcher at Hana Securities, explained the reason for the target price increase: "We raised the annual estimates by about 10%, mainly centered on the resin business division." He added, "Considering China's economic stimulus intentions, the 'Iguhwanshin' (以舊換新, replacing old items with new ones) policy, and limited global capacity expansions, polyester (PET) tire cords are expected to maintain solid performance this year. Additionally, phenol and epoxy resins are likely to continue strong results due to increased demand for ships powered by natural gas and liquefied natural gas (LNG) following the election of U.S. President Donald Trump, as well as growing demand related to artificial intelligence (AI) and 5G."

The key factor identified was the recovery of aramid prices. Researcher Yoon stated, "The export volume of Korean aramid continues to increase, and some order demand recovery has been confirmed at Kolon Industries," but cautioned, "Since export prices remain weak, it is necessary to closely monitor the timing of stabilization in the downward trend."

Operating profit for the first quarter of this year is expected to increase by 47% from the previous quarter to 52.5 billion KRW. This was attributed to solid performance in industrial materials and chemicals, as well as the elimination of one-time costs incurred in the previous quarter. Chemical operating profit is projected at 26.2 billion KRW, and fashion operating profit is forecasted at 3 billion KRW, reflecting the off-season impact.

Meanwhile, Kolon Industries' operating profit for the fourth quarter of last year recorded 35.8 billion KRW, a 12% decrease compared to the previous year. This was 24% below the consensus estimate (47.3 billion KRW). The decline is attributed to one-time costs such as the merger with Glotech and performance bonuses, regular maintenance of aramid, and a drop in fashion performance due to abnormal winter weather conditions.