Delivers Earnings Surprise in Q1
Hyosung Corp. and its major affiliates will continue to make large-scale investments this year based on their robust performances.
Hyosung Corp., the holding company of Hyosung Group, and its three major listed subsidiaries, Hyosung T&C, Hyosung Advanced Materials and Hyosung Chemical, plan to invest a total of 129.7 billion won in 2021, according to the Financial Supervisory Service's electronic disclosure system. For reference, they invested 139.9 billion won in 2020.
Hyosung Corp. plans to invest about 25.3 billion won this year, up 96.1 percent from 12.9 billion won in 2020. In 2018, Hyosung Group split Hyosung Corp. into five companies with Hyosung Corp. controlling the four spun-off affiliates as a holding company. The governance structure allows affiliates to invest in new projects or expand existing businesses more easily.
Hyosung T&C set its investment target at 20.9 billion won in 2021, up about 10.6 percent from its investment of 18.9 billion won in 2020. Investment being made at Hyosung T&C's overseas subsidiaries is larger. For example, thanks to a boom in the spandex industry, Hyosung T&C announced plans to expand spandex production facilities near Istanbul, Turkey, and Santa Catarina, Brazil, late in 2020. Through these investments, Hyosung is planning to further cement its position as the number one player in the global spandex industry.
The company plans to invest 60 billion won in its Turkish plant to expand its annual production capacity to 40,000 tons, up 15,000 tons from the current level. A total of 40 billion won will be invested in its Brazilian plant to raise its production capacity to 22,000 tons. In addition, Hyosung T&C is expanding its tech yarn lines at its plant in Vietnam and nitrogen trifluoride (NF3) production facilities at its plant in China.
Hyosung Advanced Materials has earmarked 51.4 billion won for investment in 2021, slightly down from 77.1 billion in 2020. Of the total, 39.4 billion won will be used to extend carbon fiber production lines at Jeonju Plant in Korea. By July 2022, the company will ramp up its carbon fiber production capacity from 4,000 tons to 6,500 tons to respond to an increase in demand for fuel tanks and high-pressure compressed natural gas (CNG) containers for eco-friendly hydrogen vehicles.
Hyosung Chemical is planning to invest 32.1 billion won this year, a slight increase from 31 billion won in 2020. Hyosung Vina Chemicals in Vietnam, an overseas subsidiary of Hyosung Chemical, has been investing US$1.33 billion since 2018 separate from its parent company. The investment will be finished in June 2021. It is planning to produce polypropylene (PP) to respond to demand for PP from plastic makers in Vietnam.
Hyosung Heavy Industries, one of Hyosung Group’s major listed affiliates, did not disclose its total investment amount for 2021. However, the company disclosed its investment in the first quarter of 2021. It amounted to 5.2 billion won, accounting for 42.3 percent of its total investment of 12.3 billion won in 2020. Hyosung Heavy Industries is currently building a factory jointly with Linde Group to mass-produce liquefied hydrogen. It will invest 300 billion won to complete the plant, located in Ulsan, by 2023. When completed, it will produce 13,000 tons of liquefied hydrogen, an amount that be used by 100,000 cars a year.
In the first quarter of 2021, both Hyosung Corp. and its major affiliates showed significant growth compared to the same period of 2020. Hyosung's operating profit increased nearly 19-fold during this period to 100.6 billion won. Thanks to strong performances of subsidiaries based on an equity method, Hyosung TNC, Hyosung Advanced Materials and Hyosung Chemicals enjoyed 200-300 percent increases in operating profit, respectively, from a year before. Hyosung Heavy Industries turned to a surplus.