[Click e-Stock] "Nexen Tire to Benefit from Tariff Cut...Target Price Raised"

Kiwoom Securities: "Market Cap Expected to Top 1 Trillion Won for First Time in 5 Years"

On the 11th, Kiwoom Securities raised its target price for Nexen Tire from 9,730 won (based on the closing price on February 10) to 12,500 won, while maintaining its "Buy" investment rating. The change reflects expected earnings improvement driven by the benefit from lower U.S. tariff rates and the expansion of its business in Europe.

Shin Yooncheol, an analyst at Kiwoom Securities, said, "Among the three domestic tire makers, Nexen Tire is the only one that does not have a plant in the United States, so concerns over the impact of U.S. item tariffs had been particularly high. For the same reason, the benefit from the reduction of the item tariff rate to 15% is also expected to be strong," adding, "The removal of the risk of a tariff hike, stemming from the potential passage of the Special Act on Investment in the U.S. in March, is being reflected in the share price."

Given that Nexen Tire's current net debt is nearing 1.1 trillion won, Shin projected that using all available resources, including funds that could otherwise be used for dividends, to repay borrowings and thereby reduce interest expenses will also be favorable for supporting the share price.

Nexen Tire's earnings in the fourth quarter of last year came in at 833.1 billion won in revenue (up 19.4% year-on-year) and 40.5 billion won in operating profit (up 161.7%), with profitability falling short of market expectations. Due to a change in the accounting treatment of the tire rental business, revenue exceeded forecasts, but profitability deteriorated as corresponding depreciation expenses of 46.0 billion won were recognized in a lump sum.

On a full-year basis for 2025, the regional breakdown of revenue was Europe 41%, North America 22%, Korea 19%, and others 18%. In particular, the plant in the Czech Republic produced 8.69 million units annually, entering a phase of stabilized utilization. However, compared with major competitors, a shortage of warehouse capacity in Europe means that the company can continue to export replacement winter tires for the European market only in the second and third quarters.

This year, production at the Czech plant is expected to increase by more than 1 million units year-on-year, and Nexen Tire's sales share in Europe is projected to expand to as much as 45%.

Meanwhile, Nexen Tire's market capitalization stands at 950.3 billion won, putting it on the verge of reaching a market cap of 1 trillion won for the first time in five years.

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