[Click eStock] "Hyosung Advanced Materials, One-time Cost Removal... Target Price 490,000 Won"

On the 30th, IBK Investment & Securities analyzed Hyosung Advanced Materials, stating, "Although the operating profit in the fourth quarter of last year fell short of market expectations, one-time costs will be eliminated starting from the first quarter of this year." They maintained a target stock price of 490,000 KRW and a buy rating.

Hyosung Advanced Materials' operating profit in the fourth quarter of last year was 20.8 billion KRW, down 41.8% compared to the previous quarter. While the tire cord market has shown a slight recovery since the third quarter of last year, price adjustments in specialty fibers have occurred due to capacity expansions by competing specialty fiber companies, along with a reduction in spreads and one-time costs in other industrial materials sectors such as industrial yarns.

The industrial materials division's operating profit was 20.7 billion KRW, a 41.4% decrease from the previous quarter. Despite increased volume from carbon fiber capacity expansion and a slight rebound in the tire cord market, profitability was slightly impaired due to capacity expansions by aramid competitors and weakened demand. Carbon fiber incurred costs related to some capacity expansions, and more than 20 billion KRW in one-time costs arose from restructuring at GST headquarters and some business sites.

The other divisions continued to record losses, with an operating loss of 1.8 billion KRW. Despite a decrease in raw material costs for spandex in Vietnam, prices also declined simultaneously. The film division experienced limited price recovery due to a downturn in the downstream business.

Operating profit for the first quarter of this year is forecasted to increase by 110.6% from the previous quarter to 43.6 billion KRW. One-time costs in the industrial materials division incurred last year are expected to be eliminated. This is influenced by the effects of carbon fiber capacity expansion and a rebound in the tire cord market, the company's main product line. Although carbon fiber prices have recently declined due to capacity expansion, it is expected to maintain solid profitability due to economies of scale and increased demand for high-pressure vessels and wire core applications. Hyosung Advanced Materials' carbon fiber production capacity is expected to increase from 9,000 tons last year to 16,000 tons in the third quarter of this year and 21,500 tons in the third quarter of next year.

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