Kiwoom Securities analyzed on the 20th that, due to a recent large fire at competitor Kumho Tire's Gwangju plant, production disruptions are expected and NEXEN TIRE may gain indirect benefits. It also raised the target stock price from the previous 5,700 won to 7,000 won.
Kiwoom Securities projected NEXEN TIRE's second-quarter revenue at 1.6 trillion won and operating profit at 118 billion won. The operating profit margin is expected to record 7.2%.
Shin Yoon-cheol, a researcher at Kiwoom Securities, noted, “Starting in the second half of the year, the impact of automotive parts item tariffs and the European Union's (EU) deforestation regulation (EUDR) on natural rubber production will come into effect, and despite the increase in European new plant utilization, the degree of performance improvement may not be significant.”
The researcher pointed out that NEXEN TIRE could defend its revenue by supplying some of its U.S. export volume to the domestic market. As NEXEN TIRE does not have a factory in the U.S., the burden of U.S. exports has increased, making it necessary to discover alternative markets.
The researcher said, “If some of the U.S. export volume is shifted to domestic supply to replace the production disruption volume caused by the Kumho Tire Gwangju plant fire, it is expected that domestic plant utilization will be maintained or increased, while also reducing the burden of export-related costs.”
He added regarding the stock price, “There was also a case where NEXEN TIRE's stock price showed a short-term rally when Korea Tire experienced a fire at its Daejeon plant in March 2023.”