NH Investment & Securities projected on June 18 that Hyosung TNC will continue to see improvements in its mid- to long-term performance. However, reflecting the potential decline in spandex prices due to seasonal off-peak periods and weak raw material prices, the firm adjusted its target price 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 expansions 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 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% 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 same quarter last 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 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 forecasts that spandex prices will decline in the second half of the year due to seasonal off-peak effects. Nonetheless, with upstream fabric manufacturers' raw material and finished product inventories remaining at historically low levels, the extent of the price decline is expected to be limited. The firm estimates that Hyosung TNC's operating profit for the year will increase by 74.5% year-on-year to reach 439 billion won.
* This article has been translated by AI.
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