[Click eStock] "Hyosung TNC Expected to See Full-Fledged Demand Increase After Lunar New Year"

On February 2, NH Investment & Securities maintained its target price of 5.1 million won and its "Buy" investment rating for Hyosung TNC, predicting a full-fledged increase in demand following the Lunar New Year holiday.

Choi Younggwang, an analyst at NH Investment & Securities, stated, "Operating profit in the fourth quarter of last year was 44.7 billion won, falling short of the consensus," and analyzed, "This was due to the seasonal off-peak period as well as a significant decrease in steel cargo volume bound for Europe." He added, "There was a one-off cost of about 9 billion won related to the restructuring of the Chinese spandex subsidiary, and an impairment loss on tangible assets of 30 billion won was recorded as a non-operating expense."

Choi pointed out, "A positive aspect is that operating profit in the textile division, including spandex, was 45.2 billion won, up 13.3% from the previous quarter despite the one-off costs." He explained, "Although the average selling price fell slightly due to an increased share of spandex sales to China, the effect of higher sales volume offset this."

He projected, "Operating profit in the first quarter of this year is expected to rebound sharply to 76.2 billion won (up 70.3%, with an operating margin of 3.9%)," and predicted, "With spandex prices rising slightly and downstream customers increasing purchases in anticipation of further price hikes, sales volume will also increase accordingly."

He further emphasized, "After the Lunar New Year holiday in China in February, spandex prices are expected to rise further," adding, "Currently, the number of days of raw material inventory at downstream fabric companies is very low, and as their operating rates rise steeply after the holiday, the increase in demand for spandex will become full-fledged."