Moon Yong-kwon, an analyst at Shinyoung Securities, said on the 6th that the European Union (EU) policy that could temporarily hit NEXEN TIRE's profitability will be a short-term variable.
Moon kept a "buy" investment rating on NEXEN TIRE and a target price of 9,000 won. That is 45.1% higher than the previous day's closing price (6,200 won).
NEXEN TIRE posted sales of 780.7 billion won and operating profit of 46.5 billion won in the third quarter of this year (July–September). Operating profit beat the market consensus by about 11%. Moon said, "Excluding the tariff, we estimate the operating margin (operating profit ÷ sales) improved to 8.5%," adding, "With sales growth and easing burdens for materials and supplies and shipping costs coinciding, it achieved the highest operating margin of the year."
In the third quarter of this year, NEXEN TIRE's sales growth rate by region was notable in Europe at 17%, following Korea at 21%. Moon explained this was due to the effect of expanding the Czech plant and growing demand in the European market for value-for-money products.
The EU's European Union Deforestation Regulation (EUDR) and the imposition of anti-dumping tariff on Chinese tires are variables. This is because NEXEN TIRE procures part of its products sold in Europe from its plant in China.
However, NEXEN TIRE plans to complete the ramp-up (Ramp-up·scaling up to mass production after equipment installation) of its second plant in the Czech Republic in 2026. Moon said, "With the ramp-up of NEXEN TIRE's Czech plant, the dependence on China for products sold in Europe can be reduced to below 20%," adding, "If uncertainty is resolved, differentiated sales growth powered by value-for-money could attract attention."