Shinhan Investment Corporation analyzed on the 22nd that tariffs and capital increases by subsidiaries are the causes of short-term discounts for Hankook Tire & Technology. It also downgraded the target price from the previous 56,000 won to 54,000 won and maintained its investment opinion of 'buy'. The closing price of Hankook Tire on the previous trading day was 40,250 won.
In the second quarter of this year, Hankook Tire's operating profit decreased by 15.8% year-on-year to 353.6 billion won, falling short of market expectations of 385 billion won. The operating profit of tires recorded 346.4 billion won, down 17.5% year-on-year. Despite a revenue increase of 8.4%, the operating profit margin decreased by 4.3 percentage points compared to the same period last year. The rise in various costs, including materials and supplies, logistics, advertising, and warehousing, seems to have affected profitability.
Shinhan Investment Corporation pointed out that Hankook Tire is likely to participate in the capital increase of its subsidiary, Hanon Systems, to some extent. Researcher Park Kwang-rae of Shinhan Investment Corporation explained, "While a capital increase could lead to improvements in Hanon's financial structure and reductions in financial expenses in the long term, the cash outflow from the parent company in the short term is negative."
Recently, Hankook Tire announced a plan to gradually expand its dividend payout ratio from the existing 20% range to 35% within three years and to regularize interim dividends.
In response, Researcher Park noted, "The profitability of the tire sector must be supported for the shareholder return plan to become a reality." He stated that price increases started in the U.S. market last month, and if the operational effects of the new facility in Tennessee in the second half are added, the tariff impact could be mitigated. If the stabilization of rubber prices, a key material, continues, he expects the operating profit margin to recover to the mid-10% range starting in the fourth quarter of this year.
Researcher Park stated, "I lowered the target price to reflect the risks of the subsidiary's capital increase," adding that "if the timing of the capital increase is confirmed and profitability improvements are verified, a dividend yield of over 5% may draw attention, making a rebound in stock prices possible."