Kumho Tire edged higher as securities firms analyzed that the prolonged Middle East war and Europe's tariffs on Chinese tires are weighing on the stock. However, the company's double-digit operating margins in recent years and the possible launch of its new European plant in 2028 were cited as key factors for mid- to long-term valuation.

As of the morning of the 22nd, Kumho Tire (073240) was trading at 5,510 won, up 20 won (0.36%) from the previous trading day. While the gain is modest, market attention is focused on broker assessments amid concerns over raw material and logistics costs and the European tariff issue.

■ Samsung Securities: "Concerns over rising raw material and logistics costs... Accelerating EV demand is a more important change"

Samsung Securities resumed coverage of Kumho Tire, citing concerns over rising raw material and logistics costs stemming from the prolonged Middle East war as a factor behind the recent stock correction. It explained that a prolonged military conflict in the Middle East could increase uncertainty in raw material procurement and international logistics costs, and tire manufacturers have a business structure in which profitability is affected by changes in raw material prices and freight costs.

Europe's tariffs on Chinese tires were also cited as a correction factor. The 24.4% tariff applied since July could weigh on the competitiveness of Chinese tires in the European market.

However, Samsung Securities did not interpret the war's impact on the automotive industry solely as a short-term rise in raw material prices. It assessed that the acceleration of electric vehicle demand could be a more important change than the short-term cost increase from the war, and advised examining both the short-term burden from rising costs and the structural shift in automotive market demand.

Regarding the European tariffs, the launch of the new plant in 2028 was presented as a factor that could ease the burden. Samsung Securities forecast that once the new plant begins operations, the current tariff burden could decrease. However, the actual effect may vary depending on the production schedule and operational conditions, so whether the tariff relief materializes remains a projection to be confirmed going forward.

Another point Samsung Securities highlighted is Kumho Tire's profitability change. It evaluated that Kumho Tire has recorded operating margins above 10% for four years since 2023, transforming into a company capable of absorbing external shocks. It judged that the improved profitability gives the company greater capacity to respond to cost increases or tariff burdens. However, it also noted that past high-margin performance does not guarantee the same profitability in the future.

■ Hana Securities cuts target price from 8,300 won to 7,700 won... Q3 operating profit expected to fall 24% short of market expectations

Short-term earnings concerns persist as well. On the 19th, Hana Securities lowered Kumho Tire's target price from 8,300 won to 7,700 won, reflecting the European tariffs and raw material cost burdens. It maintained a Buy rating.

Hana Securities projected third-quarter revenue of 1.22 trillion won, up 9% year-on-year, and operating profit of 109.6 billion won, up 1%. However, it expected operating profit to fall about 24% short of market consensus. The cost burden from Europe's tariffs on Chinese tires is also an earnings variable. Hana Securities estimated the tariff rate applied to Kumho Tire at 24.4%, with related costs for the third quarter reaching about 40 billion won.

Production facility expansion is seen as a way to ease these burdens over the mid to long term. Along with Samsung Securities' projection of the new plant launch in 2028, how the expansion of production bases will change the actual cost structure and profitability is a key question.

In the end, while Kumho Tire rose slightly to 5,510 won, brokerages are simultaneously weighing short-term cost burdens against the potential for mid- to long-term profitability improvement. Changes in raw material and logistics costs from the Middle East war, the European tariff burden, and the 2028 new plant launch remain key variables for future valuation.

[This article is intended to provide information for investment reference and does not recommend buying or selling specific stocks. Figures may vary depending on market conditions. Investment decisions and any resulting responsibility rest with the investor. AI provided partial assistance.]