English translation of the original Korean report. Images and source documents may contain Korean text.

Daeshin Securities 94,000 won · Hyundai Securities 80,000 won… Possibility of additional purchase of 30.53 billion won in Hanon Systems shares, along with illegal subcontracting ruling

The target price for Korea Tires & Technology (CEO An Jong-seon · Lee Sang-hoon) has been repeatedly lowered by major securities companies.

Amid pressure on earnings forecasts from the EU’s additional tariffs on Chinese tires and the burden of purchasing Hanon Systems shares, the controversy over Chairman Jo Hyun-beom of Korea & Company Group receiving salary during detention and the illegal subcontracting ruling within the company have coincided, highlighting financial, governance, and labor risks simultaneously.

According to the securities industry on the 7th, Daeshin Securities lowered the 6-month target price for Korea Tires to 94,000 won in its corporate analysis report released that day, while Hyundai Securities had previously adjusted the target price from 85,000 won to 80,000 won on the 28th of last month.

Both securities companies maintained their investment recommendation of ‘buy’, but pointed out the deterioration of profitability due to the additional tariffs in Europe as the main risk factor. Daeshin Securities also reduced its 2027 operating profit forecast from 2.76 trillion won to 2.524 trillion won, a decrease of 8.6%.

The EU finalized anti-dumping duties on Chinese passenger car and light truck tires in July, applying a 4.3% rate to Korea Tires’ Chinese production facilities.

Considering that about 30% of the European sales volume is Chinese-made, Daeshin Securities estimated that if the tariff burden increased by 20 percentage points, an additional annual cost of about 180 billion won would be incurred.

Hyundai Securities estimated the annual tariff cost at 186 billion won if a total tariff rate of 27.5% was applied, but noted that if the proportion of Chinese supply was reduced by 5 percentage points, the cost could be lowered to 149 billion won. However, the additional countervailing duty rate and actual cost have not been finalized yet.

In the third quarter results, net profit significantly declined despite increases in sales and operating profit.

Korea Tires’ consolidated sales were 5.465 trillion won, and operating profit was 598.8 billion won, increasing by 1.0% and 2.2% respectively compared to the same period last year, but net income fell by 59.5% to 157.9 billion won.

Tire sector sales reached a quarterly high of 2.8083 trillion won, while operating profit decreased by 2.6% to 505.9 billion won.

Additional financial burdens from the acquisition of Hanon Systems remain. Han & Company has a put option allowing it to sell up to 58.718 million shares of Hanon Systems to Korea Tires at 5,200 won per share between January 11 and February 11, 2027.

The purchase burden during the event is approximately 305.3 billion won. Hanon Systems’ third-quarter sales were 2.6569 trillion won, a 1.8% decrease, but operating profit increased by 26.6% to 120.6 billion won.

■ Controversy over the chairman’s compensation following the illegal dispatch ruling… Management responsibility under scrutiny

Legal liabilities continue in the labor sector. On July 24, the Suwon District Court, Seongnam Branch, recognized illegal dispatch in a lawsuit filed by 81 internal subcontracted workers from Korea Tires’ Daejeon and Geumsan plants.

The court confirmed the employment status of three individuals and ordered the remaining 78 to express their intent to be employed. Korea Tires appealed the first-instance verdict on August 13.

Previously, the Chungcheongnam-do Labor Commission on May 26 ruled in favor of the internal subcontracted labor union’s request for a notice of negotiation. The National Metal Workers’ Union is demanding direct employment and collective bargaining with Korea Tires.

Controversy over the payment of Jo Hyun-beom’s compensation remains unresolved. Jo was sentenced to two years in prison for embezzlement and breach of trust, was released on parole on July 30, and it was revealed that he received two disciplinary actions during his imprisonment.

Nevertheless, Jo received a total of 5.53 billion won in salaries of 546 million won and other employment income of 70 million won during the first half of this year.

Korea Tires did not respond to a query from Newsfield regarding whether it was aware of the disciplinary actions during the salary calculation process.

Amid European tariffs and large investment burdens affecting company valuation, questions remain regarding the appropriateness of top executives’ compensation, responsibility toward subcontracted workers, and the effectiveness of shareholder return policies, prompting calls for management explanations.