[Click eStock] "Kolon Industries, Tire Cord Price Uptrend... Expecting Improved Performance Next Year"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained its buy rating and target price of 115,000 KRW for Kolon Industries on the 31st. This is based on the expectation of profit growth in industrial materials through the expansion of PET tire cords next year and aramid expansion in 2023.

The estimated sales for the fourth quarter are 1.2334 trillion KRW, and operating profit is expected to be 67.1 billion KRW, representing increases of 7.5% and 11.1% respectively compared to the same period last year. Although operating profit is expected to decrease compared to the previous quarter due to regular maintenance and performance bonuses, it is predicted to show an upward trend compared to the same period last year. The operating profit for industrial materials in the fourth quarter is forecasted to be 38.2 billion KRW, a 37.4% increase year-on-year.

The export price of PET tire cords in the fourth quarter is estimated to rise by about 5% to 4.3 USD per kg from 4.1 USD in the third quarter. Despite the seasonal off-peak period, tight supply and demand conditions are expected to allow for price increases. The operating profit for the chemical business in the fourth quarter is expected to increase by 4.9% year-on-year to 17.3 billion KRW, and the high profitability of epoxy resin for electronic materials is expected to continue, leading to improved performance next year.

As the spread of variant viruses continues to cause a decline in growth stocks toward the end of the year, Kolon Industries’ stock price has also been weak since reaching a high of 115,500 KRW at the end of September. Youngchan Baek, a researcher at KB Securities, said, “Due to strengthened movement restrictions, a decrease in demand from sectors such as automobiles, IT, and textiles is inevitable. However, these concerns have already been sufficiently reflected in the stock price.”

Researcher Baek added, “The high growth in performance through the expansion of PET tire cords and aramid, as well as the commercialization of hydrogen fuel cell materials, remains valid. Considering the long-term attractiveness of growth stocks, price corrections will present a buying opportunity.”

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