[Click e-Stock] "Kolon Industries Maintains Upward Momentum...Target Price Raised"

Target Price Raised by 66% from Previous Estimate

On March 9, Shinhan Investment Corp. stated that the upward momentum for Kolon Industries remains valid and raised its target price from 53,000 won to 88,000 won. The investment opinion was maintained at 'Buy'.

Jinmyung Lee, an analyst at Shinhan Investment Corp., explained, "We have raised our target price by 66% compared to the previous figure, reflecting the increase in industry multiples and the value of investment assets." He added, "This year, operating profit is expected to reach 213.7 billion won, up 96% year-on-year, driven by improved performance in major business divisions. In particular, there remains further upside potential when accounting for the value of Kolon Sports China and the equity stakes in Woori Financial Group and Hana Financial Group."

Kolon Industries recorded an operating profit of 9.8 billion won in the fourth quarter last year, down 64% from the previous quarter and falling short of the consensus (the average forecast from securities firms) of 46.1 billion won. Lee noted, "About 10 billion won in one-off losses (including scheduled maintenance and inventory losses) were reflected in automotive materials and aramid amid sluggish downstream demand." He continued, "However, the decline in export prices for tire cord has stabilized, and aramid has rebounded for the first time in ten quarters."

This year, the company is expected to see improved performance in its main business divisions. Lee stated, "Tire cord profitability should improve through gradual normalization of selling prices and enhanced profitability at the Vietnam plant." He added, "For aramid, profitability losses are expected to narrow due to higher operating rates from a recovery in optical cable demand and the loss of competitor volumes. In chemicals, both profitability and growth potential can be secured as competitors close facilities and production capacity for modified polyphenylene oxide (mPPO) is expanded." He further noted, "Kolon Sports China is expected to achieve performance growth thanks to its strong market position in China, with equity-method profit projected to increase by 38% year-on-year to 59.5 billion won this year."

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