[Click eStock] "Kolon Industries, Stable Performance Despite Logistics Crisis"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities evaluated Kolon Industries as having recorded stable performance despite the logistics crisis on the 4th, maintaining a 'Buy' investment rating and a target price of 130,000 KRW.

Kolon Industries' operating profit for the third quarter of this year was 77.3 billion KRW, a 169.6% increase compared to the same period last year, exceeding market consensus estimates by 12.2%. Researcher Lee Dongwook of Kiwoom Securities explained, "This performance is attributed to the improvement in the main business divisions excluding the film and electronic materials sectors, despite issues such as logistics disruptions."

The operating profit in the industrial materials division recorded 77.3 billion KRW, a 150.5% increase. Although there was a slowdown in sales volume for some products due to supply disruptions in automotive semiconductors, tight supply conditions continued for aramid and tire cords. The chemical division's operating profit increased by 5.8% to 22 billion KRW. Although factors such as the operation of competitors' expanded facilities and rising raw material prices were reflected in petroleum resins, the proportion of differentiated products expanded, and prices of special epoxy resins such as 5G remained strong. The film and electronic materials division's operating profit decreased by 46.8% to 5 billion KRW. This was due to the rise in raw material prices and freight costs caused by the increase in oil prices, despite strong performance from subsidiaries in Indonesia and China. The fashion division recorded an operating loss of 500 million KRW, reducing the deficit by about 20 billion KRW compared to the same period last year. The other and textile materials division recorded an operating profit of 5.2 billion KRW, turning to black ink. Although losses continued in subsidiaries related to textile materials, the golf leisure business showed strong performance.

There is an opinion that the value of the aramid business needs to be reflected more aggressively. Kolon Industries plans to expand its current aramid production capacity of 7,500 tons to 15,000 tons by the third quarter of 2023 to proactively prepare for the increasing demand for 5G and electric vehicle tires. Researcher Lee said, "Kolon Industries' aramid sales are expected to increase from about 190 billion KRW this year to around 400 billion KRW after the expansion," adding, "This will be gradually reflected in Kolon Industries' market capitalization this year and next." He also added, "The diversification of raw material procurement, including domestic chemical companies' plans to build aramid raw material plants, will have a positive impact on Kolon Industries' performance in the mid-term, as it reduces reliance on imports from China."

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