[Click eStock] "Kumho Tire, Full Turnaround in Q1"

On the 12th, KB Securities analyzed that Kumho Tire is expected to see a full-scale turnaround in the first quarter.

Kim Hyun-gyeom, a researcher at KB Securities, explained in a report on the day, “Kumho Tire has a total of eight production plants in Korea, China, the United States, and Vietnam, and has a global sales network through nine sales corporations and 14 branches worldwide,” adding, “Since being acquired by the Chinese state-owned tire company Double Star in 2018 (KRW 5,000 per share, 45%), it has been operating independently.”

Researcher Kim Hyun-gyeom stated, “Last year’s performance recorded sales of KRW 3.5592 trillion, operating profit of KRW 23.1 billion, and a net loss of KRW 77.5 billion, representing a 36.8% increase in sales, a turnaround to profit, and continued net loss compared to the previous year,” and added, “Performance improvement was achieved reflecting improved cost of sales ratio and product price increases, and recently, through the announcement of this year’s operating performance outlook, sales of KRW 4.27 trillion, a 20% increase from the previous year, were presented.”

He continued, “A significant turnaround is expected with consolidated sales of KRW 985 billion and operating profit of KRW 46.5 billion in the first quarter, representing increases of 33.3% and 9,299% respectively compared to the previous year,” and forecasted, “Despite the first quarter generally being an off-season, remarkable results are expected due to profit spread expansion from product price increases and raw material price decreases.”

He explained, “Sales growth in Europe and the Americas is expected due to the expansion of sales distribution channels and CAPA (production capacity) increases,” adding, “The Vietnam plant’s CAPA is scheduled to expand from 6 million units (end of 2022) → 7 million units (end of March) → 11 million units (end of May) → 12.5 million units (end of December), and it is appropriately responding to volume increases in Europe (China plant) and the Americas (Vietnam plant), while diversification of customers through expansion of sales channels in Europe, including France and Poland, is very positive.”

He further noted, “Potential M&A (merger and acquisition) possibilities could also act as a major issue,” analyzing, “2023 marks the fifth year since the acquisition by Double Star in 2018, and the major shareholder lock-up period (5 years, allowing full disposal of holdings) ends, so sale issues could emerge at any time.”

Additionally, he added, “Delays in relocating the Gwangju plant and uncertainties regarding the extension request of the joint voluntary agreement with the Korea Development Bank in July could act as risk factors.”

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