Hankook Tire & Technology received a target price increase to 120,000 won from Meritz Securities on the 21st, marking a level more than 70% above the stock's closing price of 70,100 won and representing the highest target among brokerage coverage. The upward revision follows the company's expanding presence in the battery electric vehicle (BEV) tire market, where operating margins for original equipment (OE) tires reach 7-9% compared to 3-5% for internal combustion engine (ICE) products. Brokerage analysts attribute the revaluation to Hankook's early positioning in BEV tires, with the segment's share of OE sales expected to climb to 33% this year from 5% in 2021, alongside a replacement tire market entering its growth phase as vehicles sold since 2021 reach the 4.6-year replacement cycle.
Meritz Securities Sets 120,000 Won Target Price for Hankook Tire Stocks
Meritz Securities presented a target price of 120,000 won for Hankook Tire on the 21st, up from its previous target. The figure stands more than 70% above the stock's closing price of 70,100 won and ranks as the highest target price currently offered by brokerage firms covering the company. Analysts cite the company's competitive position in the BEV tire market as the core driver of corporate value reassessment.
BEV OE Tire Operating Margins Reach 7-9%
According to Meritz Securities, the share of BEV tires within Hankook's OE sales is expected to reach 33% this year, up from 5% in 2021. During the same period, the proportion of electric vehicles in global passenger car sales is projected to rise from 6% to around 20%. BEV OE tires deliver operating margins of 7-9%, approximately double the 3-5% margins generated by ICE tires, according to the analysis.
Hankook Supplies OE Tires to Tesla, BYD, Xiaomi, Volkswagen, BMW
Hankook Tire is expanding supply contracts with global automakers through its BEV-dedicated brand 'iON.' Kim Jun-seong, a Meritz Securities researcher, stated that Hankook supplies OE tires to Tesla, BYD, Xiaomi, Huawei, and IM Motors among U.S. and Chinese manufacturers. The researcher added that the company's early market entry effect is translating into supply contract wins for new BEV models from legacy automakers including Volkswagen and BMW.
Replacement Tire Market BEV Share at 8-9%
The replacement (RE) tire market is entering a growth phase as approximately 4-5 years have passed since BEV adoption accelerated in 2021. Replacement BEV tires generate higher profitability than OE products. The industry estimates an average replacement cycle of 4.6 years, with the related market expected to grow rapidly starting this year. Kim noted that BEV's share of Hankook's RE sales currently stands at only 8-9%, with the full replacement cycle beginning this year.
Hanwha Investment & Securities Estimates Q2 Operating Profit at 413.5 Billion Won
Hanwha Investment & Securities projects Hankook Tire's Q2 tire division sales at 2.7 trillion won and operating profit at 413.5 billion won. These figures represent increases of 7.3% and 19.4% respectively compared to the same period last year. Kim Seong-rae, a Hanwha Investment & Securities researcher, stated that the company's sales growth momentum continues into the second half, supported by increased demand for products including winter tires, improved European product sales mix, and price increases across regions including North America. The researcher added that the ramp-up of the Tennessee plant in the U.S. and the European Union's anti-dumping tariffs on Chinese tires position the company favorably for securing price competitiveness versus competitors.
Raw material price increases for natural rubber and synthetic rubber are identified as variables for second-half performance. Geopolitical risks in the Middle East could expand cost pressures if they persist. Brokerage firms assess that Hankook's growth story extends beyond simple BEV sales increases, as the proportion of high-profitability business segments grows through both OE supply expansion and the opening of the replacement market.
FAQ
What target price did Meritz Securities set for Hankook Tire stocks on the 21st?
Meritz Securities set a target price of 120,000 won for Hankook Tire on the 21st, which is more than 70% above the stock's closing price of 70,100 won and represents the highest target among current brokerage coverage.
What are the operating margins for Hankook's BEV OE tires compared to ICE tires?
According to Meritz Securities analysis, BEV OE tires generate operating margins of 7-9%, approximately double the 3-5% margins delivered by ICE tires. The higher profitability stems from BEV tires' specialized design and market positioning.
Which automakers does Hankook supply BEV tires to?
Hankook supplies OE tires to Tesla, BYD, Xiaomi, Huawei, and IM Motors among U.S. and Chinese manufacturers, and has secured supply contracts for new BEV models from legacy automakers including Volkswagen and BMW through its 'iON' brand.
