DAISHIN SECURITIES assessed on the 1st that the impact of the fire at the Gwangju plant in the second half will be fully reflected for Kumho Tire. It lowered the target price by 7% to 6,900 won while maintaining the investment opinion of 'buy'. On the last trading day, Kumho Tire's closing price was 4,505 won.
Researcher Kim Gwi-yeon from DAISHIN SECURITIES noted that "Kumho Tire has continued to review the response to the incident, allocation of volume, and recovery plans following the fire at the Gwangju Plant No. 2 that occurred in May this year" and added, "With the announcement of the recovery plan in July, there is a high possibility that the settlement of insurance claims and the transfer of the factory will accelerate."
He pointed out that if the maximum compensation limit of 500 billion won for fire insurance is received and the visibility of the factory transfer increases, the stock price could rebound despite the downward pressure on second-half performance due to the fire.
DAISHIN SECURITIES estimated that Kumho Tire will record sales of 1.3 trillion won and operating profit of 204.7 billion won in the second quarter (April to June) of this year. This represents an increase of 11% and 35%, respectively, compared to the same period last year. Operating profit is estimated to exceed the market average forecast (162 billion won), with an estimated operating profit margin of 16%.
Researcher Kim explained that "The impact of the fire and tariffs on performance will be limited due to the inventory responses to the Gwangju plant fire and U.S. tariffs, as well as the potential refund of anti-dumping tariffs (estimated at 35 billion won)" but cautioned, "However, in the second half, the impact related to the fire and tariffs may become more pronounced due to inventory depletion."
Earlier, on May 17 of this year, a large fire broke out at Kumho Tire's Gwangju Plant No. 2, burning more than half of the plant's area. The production capacity of Gwangju Plant No. 2 accounts for 60% of the domestic plant's production capacity.