HS Hyosung Advanced Materials seen benefiting from hybrid tire cords priced at 5 times as much: Samsung Securities

[Financial News] An analysis suggests that growing demand for electric-vehicle tires could expand growth opportunities for HS Hyosung Advanced Materials, a leader in the global polyester (PET) tire cord market. EV tires have shorter replacement cycles than those for internal-combustion-engine vehicles, and high-value-added hybrid tire cords are also beginning to be adopted in premium EV tires. This is expected to make higher profitability possible through increased sales volumes and an improved product mix.
On the 22nd, Samsung Securities said that an expanding electric-vehicle market could benefit HS Hyosung Advanced Materials' tire cord business. Cho Hyun-ryul, a senior researcher at Samsung Securities, cited growing replacement demand for EV tires and increased sales of hybrid tire cords as drivers of growth. However, the firm did not issue a separate investment rating or target price.
HS Hyosung Advanced Materials is the leading company in the global PET tire cord market, with a market share of about 50%. In the first half of this year, its tire reinforcement materials business accounted for 58% of total revenue and 90% of operating profit. Last year, the company recorded consolidated revenue of 3.283 trillion won and operating profit of 157 billion won. This means that changes in the performance of its tire reinforcement materials business have a significant impact on the company's overall profitability.
Growing demand for EV tires could lead to increased tire cord sales. According to Samsung Securities, EVs weigh more than internal-combustion-engine vehicles, causing their tires to wear faster, and their replacement cycle is 1–2 years shorter. In addition, as the use of wide and high-load tires increases, the amount of reinforcement material used in each tire is also trending upward.
Growing sales of hybrid tire cords, a high-value-added product, are also cited as a factor that could improve profitability. Hybrid tire cords combine nylon and aramid, and their average selling price is five times that of conventional nylon tire cords. EV tires must withstand the vehicles' heavy weight and instantaneous torque, making high-speed durability and lightweight performance important. As a result, some premium EV tires are adopting hybrid products in place of conventional nylon tire cords.
However, the high selling price of hybrid tire cords does not automatically mean an increase in overall operating profit. The extent of any improvement in profitability may vary depending on the product's actual share of sales, production costs and other factors. Samsung Securities expects profitability to improve through increased hybrid tire cord sales if demand for EV tires grows.
The link with the aramid business was also cited as a factor that could improve profitability. HS Hyosung Advanced Materials also operates an aramid business, and aramid is used as a raw material for hybrid tire cords. If sales of hybrid tire cords expand, internal demand for aramid could also increase. Samsung Securities said this could improve profitability not only in the tire cord business but also in the aramid business.

[email protected] Kim Mi-hee Reporter