Meritz Securities announced on July 20 that it has raised its target price for Hankook Tire & Technology from 90,000 won to 120,000 won, citing the company's strong positioning in the electric vehicle (BEV) tire market, which is expected to lead to structural profitability improvements and a reevaluation of its valuation. The investment recommendation remains a 'buy.'
Kim Jun-sung, a researcher at Meritz Securities, stated, "Hankook Tire has been preparing for the expansion of the BEV market with its exclusive electric vehicle tire brand 'iON,' making it the only top brand to do so." He added that a structural upgrade in performance is anticipated due to changes in the product mix.
He further noted, "The share of BEV tires in Hankook Tire's original equipment (OE) sales is expected to increase from 5% in 2021 to 33% this year. This growth rate will surpass the overall market growth, which is projected to rise from 6% to 20% in global passenger car sales during the same period."
Additionally, he highlighted that the 'iON' brand has ranked first in overall performance evaluations for four consecutive years by the German automotive media outlet Auto Bild, and all products in the lineup recently achieved top performance ratings in TÜV SÜD's electric vehicle tire assessments. This differentiated performance has led to supply agreements with global electric vehicle manufacturers such as Tesla, BYD, Xiaomi, Huawei (Ceres-AITO), IM Motors (SAIC), and Leaf Motor.
Kim also mentioned that with the expansion of vehicle exports from China, contracts for new BEV models have been secured with global automakers like Volkswagen and BMW. He believes that the increased share of BEV OE tires will lead to structural profitability improvements.
Looking ahead, he projected that starting in 2026, the demand for replacement tires (RE) for BEVs will significantly increase as the replacement cycle for electric vehicles begins. He noted that BEV RE tires have profit margins more than double those of BEV OE tires, which will further enhance the benefits of the product mix improvement.
* This article has been translated by AI.
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