[EQUITIES] ‘Nexen Tire’s Czech plant double-edged sword’
[THE INVESTOR] Nexen Tire will begin operation of its Czech factory in the latter half, which could however be a matter of concern given the industry conditions, said NH Investment and Securities on Aug. 17, downgrading to a “hold” from a “buy” and lowering the target price to 11,500 won (US$10.22) from 14,500 won.
It will begin a dry run in September before starting commercial operations next year which will boost manufacturing capacity and strengthen its position in Europe in the long run. The firm can diversify its tires manufactured in Korea and China that are being sold in Europe now, but demand in North America and Korea is likely to remain slow while competition will heighten, and that should be a cause for worry, said analyst Cho Su-hong.
Uncertainties in emerging markets and the possibility of demand slowing down in Europe could burden the tire maker initially, and investment recommendation will be readjusted when it is confirmed that its Czech factory successfully runs, added the analyst.
By Hwang You-mee (firstname.lastname@example.org)