NH Investment & Securities projected on June 18 that Hyosung TNC will continue to see improvements in its mid- to long-term performance. However, due to the seasonal off-peak period and a decline in raw material prices, the firm adjusted its target price for Hyosung TNC from 730,000 won to 540,000 won, a 26% decrease. The investment recommendation remains a 'buy.'
Choi Young-kwang, a researcher at NH Investment & Securities, stated, "There will be no new spandex production capacity added this year, and the planned expansion in 2027 will not disrupt the balance of supply and demand considering the expected increase in demand. We anticipate that Hyosung TNC's operating profit growth will continue into 2027."
NH Investment & Securities expects Hyosung TNC's consolidated operating profit for the second quarter of this year to reach 154.3 billion won, marking a 79.0% increase from the previous quarter and a 110.5% rise compared to the same period last year, surpassing market consensus. Revenue for the same period is projected to be 222.5 billion won, up 17.8% year-on-year.
The firm analyzed that the increase in spandex prices and sales volume will drive performance improvements. The average spandex price for the second quarter is estimated to have risen by 19.3% compared to the previous quarter, with an increase in sales volume attributed to more business days following the end of the Lunar New Year holiday. The nylon and polyester sectors are also expected to reduce their losses due to rising prices.
However, NH Investment & Securities anticipates that spandex prices will decline in the second half of the year due to seasonal off-peak effects. Nevertheless, it predicts that the extent of the price drop will be limited, as raw material and finished product inventories at upstream fabric companies remain at historically low levels. The firm estimates that Hyosung TNC's operating profit for the year will increase by 74.5% year-on-year to 439 billion won.
* This article has been translated by AI.
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