[Click e-Stock] "HS Hyosung Advanced Materials Expected to Recover Carbon Fiber Profitability"

NH Investment & Securities has analyzed that HS Hyosung Advanced Materials, having completed the disposal of non-performing inventory, is now at a point where it can expect the benefits of its expansion in Vietnam. The firm maintained its Buy rating and target price of 240,000 won.

On January 21, Ryu Seungwon, a researcher at NH Investment & Securities, stated, "While the strong profit margin for tire cords continues, profitability improvements in carbon fiber, driven by the operation of new facilities in Vietnam, are expected to lead to improved results in 2026." He also explained, "It is positive that the impact of inventory valuation losses will disappear in 2026, as restructuring and the disposal of non-performing inventory are expected to be completed in the third or fourth quarter of 2025."

In the fourth quarter of last year, HS Hyosung Advanced Materials is expected to slightly underperform the consensus, but show improvement compared to the previous quarter. Operating profit is projected to reach 3.02 billion won, up 56.3% from the previous quarter.

Researcher Ryu commented, "Although profitability for tire cords will weaken due to the seasonal off-peak period, we estimate that the scale of inventory valuation losses related to the disposal of non-performing inventory in industrial yarn and carbon fiber has decreased compared to the third quarter."

HS Hyosung Advanced Materials plans to begin operating its new carbon fiber facility in Vietnam in the second half of 2026. As the proportion of sales to China, where prices are lower, decreases and the utilization rate of the cost-competitive Vietnam facility rises, the carbon fiber deficit is expected to shrink significantly. Total carbon fiber production capacity is also expected to expand from 16,500 tons in 2025 to 21,500 tons in 2026, and to 24,000 tons in 2028.

Researcher Ryu said, "Operating profit in the first quarter of 2026 is expected to reach 4.65 billion won, an improvement of 54% year-on-year," adding, "This is due to improved profitability from entering the peak season for tire cords, a turnaround to operating profit in industrial yarn as the impact of inventory valuation losses disappears, and a narrowing of operating losses in carbon fiber."