[Edaily Reporter Shin Ha-yeon] On the 18th, NH Investment & Securities lowered its target price for #Hyosung T&C by 26% from 730,000 won to 540,000 won, reflecting the possibility of a decline in spandex prices in the second half of the year. However, the firm maintained its “Buy” investment rating, noting that the trend of improvement in the medium- to long-term spandex market remains valid.

Choi Young-gwang, an analyst at NH Investment & Securities, stated, “While 2026 earnings are expected to follow a pattern of strong first half and weak second half, a significant year-over-year improvement is anticipated,” adding, “In 2027 as well, the upward trend in operating profit is expected to continue, supported by a solid supply-demand balance.” He further assessed, “Based on the current stock price, the 2026 price-to-book ratio (PBR) stands at around 0.9x, indicating sufficient valuation appeal.”

Analysts suggest that the downward revision of the target price is more a matter of adjusting expectations than a reflection of deteriorating market conditions. Analyst Choi explained, “We lowered this year’s operating profit forecast by 10.6% from the previous estimate to reflect the decline in spandex prices in the second half of the year, driven by the seasonal off-peak period and weak raw material prices,” adding, “We also removed the premium previously factored into our target price calculation, as restructuring at competitor Lycra has been completed.”

Earnings are expected to improve significantly starting in the second quarter. NH Investment & Securities estimated Hyosung T&C’s second-quarter operating profit at 154.3 billion won, a 110.5% increase year-over-year. This figure exceeds the market consensus by 26%.

Analyst Choi stated, “The cumulative average spandex price and spread for the second quarter rose by 19.3% and 18.7%, respectively, compared to the previous quarter, and sales volume is estimated to have increased due to the rise in business days following the end of the Lunar New Year holiday,” adding, “Operating profit in the textile division is expected to reach 1352억 won, driving the company’s overall performance improvement.”

Although the company will enter the seasonal off-peak period in the second half of the year, the slowdown in business conditions is expected to be limited. Analyst Choi explained, “Both raw material and finished goods inventories at downstream fabric manufacturers are at historic lows,” adding, “Demand for production of the 2027 spring/summer (S/S) season is anticipated, and stronger-than-usual purchasing demand is expected to prevent prices from falling.” He added, “The impact of the off-season is expected to be weaker than last year, and operating profit for the second half is projected to increase by 96.7% year-over-year.”

The medium- to long-term supply and demand outlook for spandex was also assessed positively. The analysis suggests that industry conditions will continue to improve this year, as demand steadily increases while new capacity expansions are virtually nonexistent.

Analyst Choi noted, “Although new capacity expansion of approximately 125,000 metric tons is scheduled for 2027, considering an average annual demand growth rate of 8%, the spandex capacity utilization rate is projected to actually rise from 77.5% in 2026 to 78.6% in 2027,” and "Based on this improving supply-demand balance, Hyosung T&C’s profit growth trend is also expected to continue," he emphasized.