High-flying Affiliates in Materials Sector
Hyosung TNC, Hyosung Advanced Materials, and Hyosung Chemical are flying high in the materials sector. The three Hyosung Group affiliates showed record-high performances in 2021, and are expected to continue to make strong profits in 2022. Analysts say that the group's preemptive investment strategy has paid off handsomely.
Securities firms estimated Hyosung TNC’s consolidated operating profit in 2021 at 1.458 trillion won, up 447 percent from a year earlier, according to financial information provider FnGuide on Jan. 23.
The company's spandex business drove the stellar business performance. Based on 30 years of research, Hyosung TNC tops the world spandex market. Its market share stood at 32 percent in 2020. Currently, more than half of its total sales comes from the spandex business.
Spandex prices soared more than 80 percent from US$6 per kilogram to US$11 in 2021 as demand for spandex exploded. The COVID-19 pandemic fueled demand for clothes with high spandex content, such as homewear and leggings. As supply failed to keep up with demand, spandex prices soared.
A global shortage of spandex supply is expected to continue in 2022. Although production increased as Chinese companies expanded their factories, supply is unlikely to keep up with soaring demand, analysts say. Hyosung TNC is expected to benefit from growing demand as it has steadily expanded its factories. The company completed a 36,000-ton factory in Ningxia, China, in November 2021, and plans to complete the construction of facilities with annual production capacities of 15,000 tons and 9,000 tons at its Brazilian and Turkish plants in 2022, respectively.
The outlook is also bright for Hyosung Advanced Materials, which enjoys the world’s No. 1 market share in the polyester (PET) tire cord market. The company’s consolidated operating profit for 2021 is estimated at 436.1 billion won, up 1,174.9 percent from a year earlier. Demand for tire codes is expected to climb by 37,000 tons in 2022, but supply is expected to ascend by only 19,000 tons. Accordingly, the company’s tire cord business is expected to continue to enjoy high profitability.
The company is also expanding aramid and carbon fiber production facilities, which are growth drivers for the company.
In addition, Hyosung Chemical, which produces polypropylene (PP), is also expected to log the best performance since its split-off. The company's consolidated operating profit for 2021 likely reached 189.8 billion won, up 211.5 percent from a year earlier. Demand for PP for masks and syringes and nitrogen trifluoride (NF3) for semiconductors and displays inflated, expanding the company's profits, analysts say.
In 2022, Hyosung Chemical expects its profitability in the PP business to improve further as its Vietnamese PP plant will start full-fledged operations. It invested US$1.3 billion in the plant. Additional profits are expected as its NF3 production capacity will rise from 4,800 tons to 6,800 tons within 2022. It invested 119.8 billion won in the Oksan plant in North Chungcheong Province of Korea.