Shinhan Investment & Securities said on the 19th that the spandex industry continues to show a sluggish trend due to supply pressure from new capacity additions, and that a long-term approach to Hyosung TNC is necessary. Accordingly, it maintained its investment rating at "buy" but lowered the target price by 15% to 340,000 won from the previous 400,000 won. The previous trading day's closing price of Hyosung TNC was 223,000 won.
Lee Jin-myeong, a senior researcher at Shinhan Investment & Securities, said, "Despite demand uncertainty related to U.S.-China tariffs, it continues to maintain solid fundamentals as the No. 1 global spandex producer," and noted, "Even with a slower-than-expected industry recovery, considering expectations for China's consumption-boosting measures and restructuring in the chemical industry, the direction is expected to point upward rather than downward."
He added, "Spandex prices in China have been on a clear downtrend since 22, and in the third quarter the spandex operating rate and days of inventory were 79% and 51 days, respectively, marking a lower operating rate and higher inventory days compared with historical averages," and analyzed, "Even so, the first-half operating margin for spandex was 10%, remaining above the peer average."
The researcher said, "However, since the start of the year, the share price rose 46% from the bottom on the back of strong first-quarter results and improvement expectations, but turned downward as it failed to meet heightened market expectations," and added, "By contrast, shares of Huafeng, the global No. 2, are up 38% from the bottom, while Hyosung TNC's shares fell 13% over the same period, widening the gap."
He went on, "Even with a lack of short-term momentum, considering its No. 1 global competitiveness and differentiated profitability, the discount is expected to gradually narrow."