[EQUITIES] ‘Nexen Tire gears up with Czech plant’
[THE INVESTOR] Nexen Tire’s growth potential will expand as its Czech factory begins operations in the latter half this year, said NH Investment and Securities on May 30, maintaining a “buy” recommendation. Reflecting the fact that its main North American market is slowing down, however, the securities firm lowered the target price to 14,500 won (US$13.41) from 16,000 won.
Although the North America market is slow, revenue reduction rate is shrinking, its current stock price is at the level of its lowest in the past three years and unlikely to slide further. Its mid- to long-term growth potential will grow as it improves product portfolio and starts the Czech factory operations. The new plant will not only boost its manufacturing capacity but also improve cost structure by diversification in Europe, said analyst Cho Su-hong.
Factoring in the possible loss from operating a new facility, the tire maker’s revenue this year will climb 1.7 percent from last year to 2 trillion won while operating profit will decline 9 percent to 168.6 billion won. Its operating profit ratio will advance to 10 percent by 2020, from this year’s 8.4 percent, he added.
By Hwang You-mee (firstname.lastname@example.org)