SEOUL, KOREA - Shinhan Investment & Securities said on April 21 that Hankook Tire would likely see its first-quarter sales revenue growth slow and lowered its target price 6 percent to 78,000 won. The investment opinion remained at "buy." The securities firm expected the tire manufacturer's first-quarter sales revenue to rise 1.4 percent to 1,703 biillion won year on year, but the operating profit down 4.2 percent to 251 billion won.

 

Shinhan Investment & Securities analyst Choi Jong-hyuk said, "The average selling price of tires has not recovered as expected from last year's 2.9-percent decline. Given this, Hankook Tire's sales growth would slow down a bit. The rising share of Chinese-made tires in the U.S. market would have affected the company's performance."

 

"Another reason for Hankook Tire's lackluster performance is the strong won against the U.S. dollar that made Korean exports in the overseas market more expensive. On the upside, the continuous trend toward falling primary goods prices including that of natural rubber bodes well for the whole tire-making industry," he added.

 

He predicted that the company's sales revenue for the whole year of 2014 would be 7,499.2 billion won, up 6.1 percent from 2013, with operating profit rising 3.3 percent to 1,064.9 billion won.

 

"Given the current trend toward the rising global tire demand ahead of the summer driving season, it is abundantly possible for the tire average selling price to recover. The first-quarter replacement tire demand rose 11 percent in China, followed by North America and Europe each with 7 percent and 4 percent," he further said.