[Click e Stocks] "Hyosung TNC Target Price 480,000 Won... Spandex Price Rebound Expected to Be Stronger Than Anticipated"

Heungkuk Securities maintained a target price of 480,000 KRW and a buy rating for Hyosung TNC on the 31st.

Hyosung TNC recorded sales of 1.767 trillion KRW and an operating profit of 29 billion KRW in the fourth quarter of last year, falling short of consensus. Profitability in the nylon, polyester, and trade & other business divisions was somewhat sluggish. Although sales volume and prices of spandex slightly declined compared to the previous quarter, the spread of polytetramethylene glycol (PTMEG) expanded, maintaining profitability at the previous quarter's level.

In the textile sector, the spandex-butanediol (BDO) lagging spread remained at the previous quarter's level, and the performance of the BDO and PTMEG divisions was in line with expectations. It is expected that in the first quarter of this year, the price declines of BDO and PTMEG will be fully reflected, leading to an expansion of the spandex spread. The nylon and polyester divisions saw an increase in losses due to intensified fixed cost burdens from the initial operation of the new factory in Vietnam. Additionally, profitability was weak as the rise in ocean freight charges in the oversupplied market could not be passed on to product prices.

In the trade division, both sales volume and prices decreased due to the seasonal off-season caused by year-end customer inventory adjustments and sluggish global steel demand. Tire reinforcement materials

showed increased profits compared to the previous quarter as one-time costs disappeared and the market recovered.

Researcher Jang Hyun-gu of Heungkuk Securities analyzed, "Unlike Chinese competitors, Hyosung TNC has established a global factory system by location, so it will not bear the burden of the currently high ocean freight rates, and profitability is expected to improve more stably compared to other companies," adding, "Inventory days are decreasing due to inventory accumulation demand before the Lunar New Year, and spandex prices are at historically low levels." Researcher Jang forecasted, "The rebound in spandex prices, which will begin in earnest with the recovery of the industry this year, is expected to be stronger than the market anticipates," and "Hyosung TNC, the market leader in an increasingly oligopolistic market, will continue to enhance its competitiveness going forward."

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