[Click eStock] Hyosung, Target Price Lowered Despite High Dividend Expectations

[Asia Economy Reporter Junho Hwang] Hi Investment & Securities has lowered the target stock price to 120,000 KRW due to a decline in the stock prices of subsidiaries, while judging that the possibility of an increase in dividends per share is high as dividend income from Hyosung's listed subsidiaries has significantly increased.

Hyosung paid dividends per share of 5,000 KRW in 2019 and 5,000 KRW in 2020, resulting in total dividends of 101.7 billion KRW in 2019 and 99.5 billion KRW in 2020.

The dividend source was unlisted subsidiaries, but last year, the dividend resources from listed subsidiaries are expected to increase significantly due to improved performance and other factors.

First, with Hyosung TNC's dividend per share increasing from 5,000 KRW in 2020 to 50,000 KRW last year, the company's dividend income is expected to increase tenfold from 4.4 billion KRW last year to 44 billion KRW this year.

Hyosung Advanced Materials had no dividends in 2020, but with a dividend per share of 10,000 KRW decided last year, the company's dividend income is expected to reach 9.5 billion KRW this year.

Under the environment of increased profits last year, the significant increase in dividend income from listed subsidiaries raises the possibility not only of maintaining the company's dividend per share at 5,000 KRW but also of increasing it.

Even assuming the company's dividend per share remains at 5,000 KRW, the dividend yield based on the current stock price (as of 2/24) is about 6.0%. Above all, considering the expansion of dividend income from listed subsidiaries, the possibility of an increase in dividends per share is also rising, which is expected to act as a factor strengthening the downside rigidity of the company's stock price.

However, Lee Sangheon, a researcher at Hi Investment & Securities, stated, "Reflecting the decline in the stock prices of major subsidiaries, we have lowered the target stock price to 120,000 KRW, and for subsidiary valuation, the average market price was applied for listed companies, and book value was applied for unlisted companies."

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