Hana Securities projected that Kumho Tire's [073240] third-quarter earnings this year will fall below market expectations, lowering its target price from 8,300 won to 7,700 won on October 19. However, the investment rating was maintained as a "Buy."

In a report released on the 19th, analyst Song Sun-jae stated, "Third-quarter operating profit is expected to decrease by 24% compared to the market consensus due to the reflection of European tariffs," adding, "Sales and operating profit are projected to increase by 9% and 1% year-on-year, reaching 1.22 trillion won and 109.6 billion won, respectively."

These figures reflect expectations of top-line growth driven by expanded OE (Original Equipment) supplies to automakers in North America and Europe, as well as the effects of price hikes implemented in the first half of the year.

Analyst Song evaluated, "Despite volume growth and rising selling prices, it is regrettable that short-term earnings momentum is declining due to a narrowing spread between selling prices and input costs resulting from higher raw material costs."

He also pointed out, "The decline in the won-dollar exchange rate in the third quarter is expected to partly limit the scale of top-line growth," and noted, "Anti-dumping tariffs imposed by Europe on Chinese tires starting July 8 are being reflected in production costs, with Kumho Tire's applicable tax rate at 24.4%, estimated at 40 billion won for the third quarter."

He forecasted that the proportion of imports from Chinese factories accounts for roughly 50% of Kumho Tire's total sales in Europe.

Nevertheless, regarding volume growth, analyst Song stated, "Mid-single-digit growth rates are expected, driven by increased OE volumes for global automakers in North America and Europe, as well as the expansion of new clients within the RE (Replacement Equipment) segment."

He added, "Long-term investment points remain valid, as tariff exposure will gradually decrease through production site relocation, and production capacity will be expanded with the completion of the Hampyeong and Poland plants by 2028."

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