[Click eStock] "Kolon Industries Worth Expecting in Short, Medium, and Long Term"

Shinhan Financial Investment "Maintains Kolon Industries Target Price at 85,000 Won"
Aramid Expansion, Hydrogen Materials, CPI, PBAT Contribute to Mid- to Long-Term Growth

[Asia Economy Reporter Gong Byung-sun] Kolon Industries is expected to have both positive performance and growth momentum this year. Accordingly, Shinhan Financial Investment maintained a target price of 85,000 KRW and a 'Buy' investment rating for Kolon Industries.

According to Shinhan Financial Investment on the 21st, Kolon Industries' operating profit is expected to achieve a turnaround in the short term this year. The drivers of the performance increase are industrial materials, fashion, and film. Operating profit in the industrial materials sector is expected to increase by 123% compared to the previous year. Tire cords are predicted to see additional price increases due to limited capacity expansion and tight supply-demand from front-end demand recovery. The subsidiary is also expected to contribute more to profits due to a performance rebound from improvements in the automotive industry.

The fashion sector is expected to see significant profit improvement as the online share expands, reducing costs, and the sales growth trend in golf and outdoor continues. A turnaround to profitability is also anticipated. Operating profit in the film sector is projected to grow by 70% compared to the previous year. Through continuous product mix improvements, the proportion of high value-added products such as multilayer ceramic capacitors (MLCC), solar power, and secondary batteries has expanded to about 50%. Shinhan Financial Investment analyst Lee Jin-myung said, "Gradual profitability improvement will be achieved through high value-added products."

Growth momentum is also expected. The background for mid- to long-term growth includes aramid capacity expansion, hydrogen materials, transparent polyimide film (CPI), and biodegradable plastic (PBAT). The analyst explained, "Despite the impact of COVID-19, operating profit in the aramid sector increased by 26% last year, and performance improvement will continue due to increased demand for 5G and electric vehicles. Additional capacity expansion in the first half of this year is expected to be reflected in 2023 results."

The hydrogen business plans to expand around proton exchange membranes (PEM) and membrane electrode assemblies (MEA), which are core materials for fuel cells. The analyst said, "The group is expected to take steps to build a hydrogen value chain."

The CPI film sector is also expected to see significant external growth. CPI film holds the number one market share (M/S) in China, and the global foldable display market is expected to grow at an average annual rate of 60% until 2025. Additionally, SK General Chemical has announced the launch of PBAT. The analyst predicted, "PBAT sales are scheduled to start from the third quarter of this year. As the global PBAT market grows to 800,000 tons by 2025, production capacity will be expanded to 50,000 tons."

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