NH Investment & Securities projected on June 18 that Hyosung TNC will continue to show improvements in its medium- to long-term performance. However, due to the seasonal off-peak period and declining 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 rating remains at 'Buy.'
Choi Young-kwang, a researcher at NH Investment & Securities, stated, "There will be no new spandex production facilities this year, and the planned expansions for 2027 will not disrupt the balance of supply and demand considering the expected increase in demand. We anticipate that Hyosung TNC's operating profit will continue to rise 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% increase year-on-year, surpassing market consensus. Revenue for the same period is projected to be 222.5 billion won, a 17.8% increase compared to the previous year.
The firm analyzed that rising spandex prices and increased 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 sales volume expanding due to an increase in 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 price increases.
However, NH Investment & Securities forecasts that spandex prices will decline in the second half of the year due to seasonal off-peak effects. Nonetheless, they believe that the drop in prices will be limited as upstream fabric manufacturers' inventories of raw materials and finished products remain at historically low levels. The firm estimates that Hyosung TNC's operating profit for this year will increase by 74.5% year-on-year to 439 billion won.
* This article has been translated by AI.
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