April 20, 2024

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[THE INVESTOR] Hankook Tire will continue to struggle as its manufacturing capacity is dented by Tennessee factory’s yield rate decline and an accident at Geumsan factory, said IBK Securities on Nov. 7, lowering the target price to 66,000 won (US$59.37) from 77,000 won. 

Its third-quarter revenue beat market expectations at 1.8 trillion won, up 10.1 percent on-year, but operating profit fell 29.2 percent to 214.1 billion won and failed to meet estimates, said analyst Lee Sang-hyeon.

Sales increased in major markets including the US, Europe and China, and its revenue stepped up but operating profit was dragged down by price rise of raw materials, explained the analyst. 

The trend will continue in the fourth quarter, according to Lee who estimated that revenue will rise 7.4 percent on-year to 1.7 trillion won while operating profit will be down 18.6 percent to 194.7 billion won.

Beginning the operations at its US factory will cost more and it is still unclear when the Korean manufacturing facility will resume production, noted the analyst. But the effect will be temporary and demand from major markets remain solid, he added maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)