Korea Investment & Securities said Kumho Tire posted solid results despite production disruptions from last year's factory fire, raising its target price 71% to 7,500 won and maintaining a 'buy' rating.
In a report issued Tuesday, analyst Kim Chang-ho said higher raw material costs had already been reflected in earnings estimates, but the firm raised its profitability forecast to account for stronger-than-expected sales volume and an increase in average selling prices.
Kim said Kumho Tire's first-quarter operating profit rose 0.3% from a year earlier to 147 billion won, in line with the market consensus. He added that profit also increased from the previous quarter and called the result effectively robust given production setbacks after a fire at the company's Gwangju plant in May 2025.
He cited expanded use of lower-cost inputs, led by stabilized natural rubber prices, along with improved product mix that supported tire price increases and higher output at other plants, including in Vietnam. He said the Gwangju plant, which has resumed production, recovered to about 10,000 tires a day in April, partially normalizing to an annual capacity of 3 million tires.
Kim cautioned that higher-cost raw material inputs beginning in the second quarter will be a burden. He pointed to rising geopolitical risks in the Middle East and a sharp jump in global oil prices, which he said drove a surge in butadiene, a key feedstock for synthetic rubber.
He added that with synthetic rubber prices rising and natural rubber also turning higher, material cost pressure is expected to increase from the second quarter, with the materials ratio likely peaking in the third quarter.
* This article has been translated by AI.
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