[Click eStock] "Hyosung Expects Strong Q1 Performance on Subsidiary Earnings Improvement"

[Asia Economy Reporter Song Hwajeong] Daishin Securities on the 19th maintained a 'Buy' investment rating and a target price of 120,000 KRW for Hyosung, expecting the company's first-quarter earnings this year to significantly exceed market expectations due to improved performance of its chemical subsidiaries.

Yang Jihwan, a researcher at Daishin Securities, stated, "Hyosung's first-quarter operating profit is expected to be 69.5 billion KRW, surpassing market expectations by more than 20%. This is because the earnings of chemical subsidiaries such as Hyosung TNC, Hyosung Chemical, and Hyosung Advanced Materials are estimated to greatly exceed market expectations, leading to an increase in equity-method income beyond forecasts."

Daishin Securities estimated Hyosung's first-quarter results at 722.5 billion KRW in sales and 69.5 billion KRW in operating profit, representing increases of 6.7% and 458.3% respectively compared to the same period last year. The main consolidated subsidiary, Hyosung TNS, is expected to report sales of 226.8 billion KRW, up 5% year-on-year, and operating profit of 20 billion KRW, down 5.4%. Other segments are projected to have sales of 456.7 billion KRW, up 8.4%, and operating profit of 15.1 billion KRW, up 88.4%. Accordingly, first-quarter equity-method income is expected to turn positive at 34.5 billion KRW.

For Hyosung TNS, the first quarter is traditionally the period with the lowest order volume throughout the year, so performance is expected to be weaker compared to the previous quarter. However, sales are anticipated to gradually increase from the second quarter, making it possible to achieve annual sales around 1 trillion KRW. Hyosung TNC and Hyosung Advanced Materials continue to maintain a solid market for spandex and tire cords, while Hyosung Chemical plans to start operating its propane dehydrogenation (PDH) process in Vietnam in the fourth quarter of this year. Although Hyosung Heavy Industries showed relatively weak performance in the first quarter, improvements in the construction sector and expectations for new businesses are expected to rise from the second quarter onward.

Researcher Yang forecasted, "Following the first quarter, the improved performance of equity-method subsidiaries and stock price increases will lead to an increase in net asset value (NAV), sustaining a favorable stock price upward trend."

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