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| Hyosung Group headquarters in Seoul |
By Yoon Ja-young
The new companies that spun off from Hyosung went in different directions on the day they debuted on the stock market. Analysts are mostly positive about them since each has a competitive edge in their respective businesses.
Hyosung Corp., which is the holding company of Hyosung Group, closed at 56,500 won, Friday, almost falling by the daily limit of 30 percent. The trading of Hyosung Corp. had been banned since May 30 for the textile group's transition into a holding company structure which aims at improved managerial transparency and better corporate governance.
The plunge seems to be due to uncertainties, according to analysts.
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| Hyosung Group Chairman Cho Hyun-joon |
Under the group's control tower of Hyosung Corp., the group spun off and newly began four affiliates of Hyosung TNC, Hyosung Chemical, Hyosung Advanced Materials and Hyosung Heavy Industries. They went through a merger in 1998 when the group was hit by the Asian financial crisis, but it decided to split the affiliates off again after 20 years.
The four companies debuted on the bourse on Friday, all performing differently.
Hyosung TNC, the group's spandex business which is the top player in the global market, soared by 8.55 percent to 247,500 won on the first day of trading. The outlook has been positive on Hyosung TNC since spandex is a high-margin textile while the market has a high entry barrier for new players.
"Since 2010, Hyosung TNC has been maintaining the top post in the spandex market. Its product boasts of superior durability and thermal resistance compared to those of its competitors, and it has a strong grip on the market thanks to customized production for each customer," said Baek Young-chan, an analyst at KB Securities.
"Despite its Chinese competitor's efforts to catch up with it, Hyosung TNC has been expanding the gap with the competitors in production capacity, total sales and profitability," he said.
Hyosung Chemical, which is engaged in the polypropylene and nylon film business, also rose to its daily ceiling, closing at 149,500 won.
Hyosung Advanced Materials and Hyosung Heavy Industries, meanwhile, faltered on their debuts.
Hyosung Advanced Materials, which manufactures tire cords, closed at 160,000 won, falling 28.25 percent from its initial price. Hyosung Heavy Industries, which is engaged in power systems and the industrial machinery business, also dipped 7.02 percent to 55,600 won.
Analysts, however, have a positive outlook.
"Hyosung Advanced Materials is the absolute number one player in the polyester tire cords market. It is expected to continue surpassing an average return on equity (ROE) of its peer group for the next three years," Baek said.
"While it was expected to suffer from the high costs of raw material in the first half of the year, it will see improvement in both total sales and profitability as the price of raw material stabilizes in the latter half of the year," he added.
"Previously, Hyosung was undervalued on the stock market compared with its competitors due to its diversified business portfolio. After the split, it will be reevaluated," said Lee Ji-yeon, an analyst at Shinyoung Securities, citing its competitiveness in spandex and tire cords.
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