"Hankook Tire & Technology Shows Strong Q3 Performance with Recovery in Operating Rate"

IBK Investment & Securities Report
Q3 Operating Profit Expected at 137 Billion KRW
Further Stock Price Increase Anticipated Due to Shareholding Competition

[Asia Economy Reporter Minji Lee] Opinions have emerged that Hankook Tire & Technology is expected to record favorable performance in the third quarter. This is because tire sales improved compared to the previous quarter as domestic and Chinese automobile sales showed good results.

According to IBK Investment & Securities on the 19th, Hankook Tire & Technology's sales in the third quarter are expected to decrease by 10% compared to the same period last year, reaching 1.6524 trillion KRW. Operating profit is forecasted to record 137 billion KRW, down 24%. Although both sales and performance have declined compared to last year, considering that operating profits in the first and second quarters were 106 billion KRW and 70.1 billion KRW respectively, an improvement trend is expected.

Lee Sang-hyun, a researcher at IBK Investment & Securities, explained, "Since automobile sales in Korea and China, which relatively quickly controlled the impact of COVID-19, were favorable, tire sales in the domestic and Chinese markets were relatively good," adding, "Although the U.S. and Europe are somewhat slower, it is estimated that sales have reached about 80% of the plan."

Considering that the phase reflecting lower raw material prices has begun, profitability is expected to improve in the second half of the year compared to the first half. Although inventory assets increased somewhat in the first half, it is judged not to be a major concern considering that the usual inventory turnover period is about three months. Inventory assets are also expected to be managed at an appropriate level as sales recover.

Shareholding competition is expected to act as an additional driving force for stock price increases. This is because in June, Chairman Cho Yang-rae sold all group-held shares to his second son, President Cho Hyun-bum, increasing the possibility of sibling shareholding competition related to the succession structure. Although stock price volatility has increased, it is expected to provide an opportunity for a positive alpha effect on the stock price.

Researcher Lee Sang-hyun said, "Although there is a possibility of U.S. anti-dumping tariffs on tires, it is expected that local factories in the U.S., Indonesia, and Hungary can respond, so the impact will be limited."

This content was produced with the assistance of AI translation services.