[Click eStock] "Kolon Industries, Continued Earnings Improvement... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Shinhan Financial Investment forecasted on the 4th that Kolon Industries' earnings improvement trend will continue and raised the target stock price from 80,000 KRW to 85,000 KRW. The investment opinion was maintained as 'Buy.'

Researcher Lee Jinmyung of Shinhan Financial Investment said, "We raised the target price by 6% reflecting the upward revision of earnings estimates," adding, "The recovery of the industry was proven through strong performance in the fourth quarter of last year, and the strong market conditions of industrial materials were confirmed through the first quarter earnings this year."

Kolon Industries recorded an operating profit of 69.1 billion KRW in the first quarter, a 160% increase compared to the same period last year, surpassing the market consensus of 54.5 billion KRW. Operating profit from industrial materials was 35.3 billion KRW, up 132% year-on-year. Film and chemical operating profits increased quarter-on-quarter due to improved product mix despite rising raw material costs. Fashion turned profitable due to expanded sales of outdoor and golf apparel and cost reductions. The researcher analyzed, "Growth was driven by price increases following the recovery in automobile and tire demand and improved subsidiary performance," adding, "The Vietnam tire cord plant turned profitable, and aramid recorded the highest quarterly export volume."

Strong performance is expected to continue in the second quarter. Shinhan Financial Investment projected Kolon Industries' second-quarter operating profit to increase by 108% year-on-year to 76.3 billion KRW. Operating profit from industrial materials is expected to rise 283% to 38.7 billion KRW. The researcher explained, "Despite the vehicle semiconductor supply shortage issue, concerns are limited due to the high replacement ratio (75%) of tire cords," and "The performance improvement trend will continue as price increases driven by steady demand persist." Film is expected to achieve an operating profit of 13.2 billion KRW, a 128% increase, due to the expansion of high value-added products and steady demand for packaging. Chemical sales will increase due to petrochemical resin expansion, but operating profit is expected to decline 15% quarter-on-quarter due to intensified competition and deteriorating profitability. Fashion is expected to improve year-on-year as sales of outdoor and golf-related apparel continue to benefit from increased leisure activities.

The researcher said, "Tight tire cord supply and demand, additional aramid expansion, mass production of hydrogen materials, and expansion of CPI (transparent polyimide (PI) film product) customers are expected," adding, "Revaluation (re-rating) driven by earnings and growth expectations will continue."

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