[Click eStock] "Kolon Industries, Operating Profit Increase This Year... Expansion of Golf Wear and Outdoor"

[Asia Economy Reporter Hwang Yoon-joo] Kiwoom Securities maintained its 'Buy' rating and target price of 94,000 KRW for Kolon Industries on the 18th, stating that the operating profit of the fashion division is expected to increase this year.

Lee Dong-wook, a researcher at Kiwoom Securities, stated, "The annual operating profit of Kolon Industries' fashion division is expected to reach 67.8 billion KRW this year, a 76.5% increase compared to the same period last year."

He explained, "This is due to the restructuring effects such as withdrawal from aging brands, expansion of online sales, and brand extension, along with increased consumption by the MZ generation in their 20s and 30s and female golfers, which is expected to significantly reflect the growth potential of golf wear."

The golf brand WAAC (spun off on May 1) is also expected to see high sales growth this year. It is known that expansion into Asian regions such as Vietnam and Taiwan, in addition to Japan, China, and the United States, is being considered. Additionally, the U.S. premium golf wear line G/FORE has expanded its stores to 16 within a year.

Among the consolidated subsidiaries, Kolon Plastics' POM (ranked third globally in production) is also expected to maintain high profitability for the next 2 to 3 years or more.

The researcher analyzed, "Despite the rise in gas prices and oil prices, methanol, the raw material, is expected to maintain a price decline due to oversupply caused by nearly 30 million tons of capacity expansion in China over the past five years."

Furthermore, POM prices have continued to strengthen due to reduced operating rates of Chinese POM companies caused by recent lockdown measures and supply disruptions in Europe due to shortages of raw materials. Due to inventory shortages among downstream companies and restrictions on future expansion projects, POM prices are expected to remain strong in the medium term.

Regarding the aramid business, a medium-term favorable trend was forecasted. The researcher said, "The global aramid fiber market is expected to grow at an annual rate of about 10%. Demand for various applications in the automotive, military, and defense industries is increasing, and demand for 5G optical cables and tires for electric vehicles is also expected to record high growth rates."

He added, "Recently, not only Kolon Industries but also domestic companies have been planning para-aramid capacity expansions, but these are estimated to be insufficient compared to the increase in demand. A large-scale expansion effect is expected to be added next year."

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