Korea Investment & Securities anticipates that a continually improving financial position at Kumho Tire Co. makes the company good value for investors.
In comments published by English-language Korean publication IT Times, analyst Kim Jin-woo said the tiremaker’s debt burden is falling rapidly, and he opines that this financial turnaround isn’t yet reflected in the current Kumho Tire share price. Kumho, thus, has been given a “buy” recommendation by Korea Investment & Securities and the target share price has been set at KRW 16,000.
“With the redemption of the bonds with stock purchase warrants and convertible bond conversion, its consolidated debt ratio is expected to decline to 288% this year from 76% in 2011,” said Kim. “During the same period, the interest coverage ratio will rise to three times from one time.”
Kim added that growing domestic marketshare and capacity utilization will further boost Kumho’s financial position. He estimated that net profit will increase 123%, and expressed optimism about the company’s ability to graduate from its debt workout program in 2014. It entered debt restructuring along with Kumho Industrial at the end of 2009. (Tyres & Accessories)