Kiwoom Securities reported on August 19 that T&L achieved record-high profitability without the benefit of tariff refunds. As a result, the firm raised its target price from 46,920 won to 48,000 won while maintaining a 'buy' rating.
Shin Min-soo, a researcher at Kiwoom Securities, noted, "The gross profit margin for the second quarter rose by 12.4 percentage points year-on-year to 53.4%, surpassing the previous record set in the first quarter." He added, "Since the U.S. clients bear the tariffs, there were no one-time gains from tariff refunds."
He further explained, "Starting from the first quarter, production efficiency of raw materials improved, leading to a significant drop in cost rates, and this trend of improving profit margins continued into the second quarter. With favorable exchange rates, we expect to maintain a gross profit margin of over 50% this quarter."
T&L's second-quarter revenue reached 56 billion won, a 44.5% increase compared to the same period last year, while operating profit surged by 150.4% to 25 billion won. Although revenue fell short of market expectations by 2.1%, operating profit exceeded forecasts by 11.9%. The operating profit margin stood at 44.6%.
Shin analyzed that "the impact of changes in inventory policy since March has dissipated, normalizing shipment volumes."
The potential for new market entries through collaboration with 3M is also viewed positively. Shin stated, "Unlike last year, when we faced challenges due to tariffs and inventory policy changes, improved production efficiency will enhance profitability. Collaborating with 3M could facilitate entry into new markets through secured distribution channels."
He also assessed that the valuation and dividend appeal are high. Currently, T&L's 12-month forward price-to-earnings ratio (PER) is 7.7, below the average of 10.6 since its listing. Shin projected that T&L's dividend per share (DPS) would reach 1,875 won, a 25% increase from the previous year, indicating an expected dividend yield of approximately 6.1% based on the closing price of 30,750 won on August 18.
* This article has been translated by AI.
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