KOSPIAutomotive161390

Hankook Tire & Technology

₩60,100▲ 2.04%2026-10-02 close

Market Cap

₩7.4T

Turnover

₩7.6B

Volume

130,000 shares

Shares out.

120M

PER

6.6×

PBR

0.6×

EPS

₩9,944

Dividend Yield

3.52%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩2,300 per share · Prices as of the 2026-10-02 close

Report overview

Top-tier tire margins, balance sheet still the task

The core tire business is holding industry-leading margins on a high-rim and EV mix plus a low EU duty rate, while the consolidation of Hanon Systems doubled revenue but also lifted leverage and interest costs.

1
Second-quarter 2026 consolidated revenue was KRW 5.68 trillion with operating profit of KRW 559.1 billion, up 5.8% and 58.1% year on year, and the company said tire-segment revenue was a quarterly record.
2
Full-year 2025 revenue of KRW 21.20 trillion was more than double the KRW 9.41 trillion of 2024, reflecting the first annual results that consolidated the thermal management unit, Hanon Systems.
3
In the EU's final anti-dumping duties on China-made tires, Hankook was assigned 4.3%, far below Kumho and Nexen at 24.4% and Chinese local makers at 45.3%.
4
Brokerages have flagged the third quarter as the peak of cost pressure as synthetic and natural rubber price spikes feed through with a lag, making the size of price increases the key offset.
5
The consolidated debt-to-equity ratio rose from 41.6% in 2024 to 87.6% in 2025, with Hanon Systems' short-term borrowings and interest burden cited as the remaining task.

Business structure

Hankook Tire & Technology is built on two pillars: the tire business and the thermal management unit (Hanon Systems), consolidated from 2025.

In 2025 the tire segment posted revenue of KRW 10.32 trillion and operating profit of KRW 1.68 trillion, while thermal management recorded revenue of KRW 10.88 trillion and operating profit of KRW 271.8 billion.

The tire segment centers on passenger car and light truck (PCLT) products plus truck and bus radials (TBR), and in the second quarter of 2026 tires of 18 inches and above accounted for 49.5% of PCLT revenue while EV-dedicated tires made up 31.8% of original-equipment tire revenue.

Regional mix has tilted toward Europe: Herald Business reported in July 2026 that the European revenue share rose from 28% in 2015 to 47% in the first quarter of 2026, with local share estimated at 12-13% and a number-one position in Germany, and cited the recent start of OE supply to BYD's Hungary plant as another factor widening its European footprint.

On capacity, the company had built roughly 98 million units of annual capacity across Hungary (17.3 million), China (30 million), the United States (5.5 million), Korea (35.5 million) and Indonesia (9.7 million), and the Hungary expansion secured European capacity of about 18 million units a year.

In thermal management, Hanon Systems holds the number-two global position in automotive HVAC and thermal management, supplies about 65% of Hyundai and Kia climate components, and in the first quarter of 2026 derived 48% of revenue from Hyundai Motor Group, 13% from Volkswagen and 11% from Ford.

Competition spans global premium players such as Michelin, Pirelli and Goodyear, and domestically Kumho Tire and Nexen Tire. North America contributed KRW 2.34 trillion, or 24.9%, of the KRW 9.41 trillion total revenue in 2024, and the gap between that sales share and low local production was the core tariff issue.

The structure is therefore best read as the combination of a Europe-centric premium tire franchise and a thermal business still in restructuring.

Earnings trend

Quarterly revenue · Operating profit

₩5.4T₩353.6B25Q2₩5.4T₩586B25Q3₩5.5T₩546.8B25Q4₩5.3T₩507B26Q1₩5.7T₩559.1B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩8.4T₩705.8B2022₩8.9T₩1.3T2023₩9.4T₩1.8T2024₩21.2T₩1.8T2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩5.4T	₩353.6B	6.6%
2025Q3	₩5.4T	₩586B	10.8%
2025Q4	₩5.5T	₩546.8B	10.0%
2026Q1	₩5.3T	₩507B	9.5%
2026Q2	₩5.7T	₩559.1B	9.8%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩8.4T	₩705.8B	₩690.2B	8.4%	7.8%	41.8%
2023	₩8.9T	₩1.3T	₩720.2B	14.9%	7.5%	32.5%
2024	₩9.4T	₩1.8T	₩1.1T	18.7%	10.0%	41.6%
2025	₩21.2T	₩1.8T	₩1.1T	8.7%	9.0%	87.6%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On an annual basis, revenue edged up from KRW 8.39 trillion in 2022 to KRW 8.94 trillion in 2023 and KRW 9.41 trillion in 2024 before jumping to KRW 21.20 trillion in 2025, largely a structural change from consolidating the thermal management unit.

Operating profit improved from KRW 705.8 billion in 2022 (8.4% margin) to KRW 1.33 trillion in 2023 (14.9%) and KRW 1.76 trillion in 2024 (18.7%), then rose slightly to KRW 1.84 trillion in 2025, but the consolidated margin diluted to 8.7% as the revenue base doubled.

Net profit attributable to owners slipped from KRW 1.11 trillion in 2024 to KRW 1.09 trillion in 2025, and operating cash flow fell from KRW 1.89 trillion to KRW 1.61 trillion.

By segment, two forces worked at once: 2025 tire revenue grew 11.8% year on year while tire operating profit fell 4.4% on tariff effects, and thermal management operating profit rose 184.5%.

Quarterly, results moved from revenue of KRW 5.37 trillion and operating profit of KRW 353.6 billion (6.6% margin) in the second quarter of 2025 to KRW 5.41 trillion and KRW 586.0 billion (10.8%) in the third, KRW 5.46 trillion and KRW 546.8 billion (10.0%) in the fourth, KRW 5.31 trillion and KRW 507.0 billion (9.5%) in the first quarter of 2026 and KRW 5.68 trillion and KRW 559.1 billion (9.8%) in the second, suggesting margins have held near double digits after a trough.

Summing the latest four quarters (third quarter 2025 through second quarter 2026) gives revenue of KRW 21.87 trillion, operating profit of KRW 2.20 trillion and owners' net profit of about KRW 1.21 trillion.

The second-quarter 2026 profit surge partly reflects a low base: a year earlier, despite higher premium product sales, raw material and freight cost increases plus US tariffs cut tire operating profit 17.5% to KRW 346.4 billion.

In the same quarter, the tire segment posted revenue of KRW 2.81 trillion and operating profit of KRW 483.2 billion for a 17.2% margin, while thermal management reported revenue of KRW 2.88 trillion, operating profit of KRW 103.7 billion and a swing back to net profit.

On the balance sheet, equity stood at KRW 14.20 trillion and liabilities at KRW 12.45 trillion at end-2025, lifting the debt-to-equity ratio to 87.6% from 41.6% in 2024.

Industry analysis

Korea's tire industry has entered a phase where mix rather than volume drives earnings.

According to the Korea Tire Manufacturers Association, first-half 2026 domestic tire output fell 7.7% to 38.41 million units and sales dropped 6.7% to 41.85 million units, yet all three Korean makers grew revenue and operating profit, attributed to a bigger share of premium high-rim and EV products.

Trade policy sharply divided outcomes.

In July 2026 the European Commission finalized anti-dumping duties on China-made passenger and light-truck tires at 4.3% for Hankook, 24.4% for Kumho and Nexen and 45.3% for Chinese producers such as Shandong Yongsheng Rubber Group, after provisional rates notified in late April of 3.4% for Hankook and 29.9% for Kumho and Nexen.

Including the existing 4.5% import duty, effective burdens work out to about 8.8% for Hankook and 28.9% for Kumho and Nexen. The cost cycle moved the other way.

Daishin Securities noted that as of April 2026 synthetic rubber export prices had jumped 70% and natural rubber 11% from the start of the year, and projected that with input lags the burden would build from the third quarter, raising the raw material ratio to revenue by 2.7 percentage points quarter on quarter.

Margin positioning remains at the top of the group: the 2025 tire operating margin of 17.9% exceeded Pirelli at 16.0%, Michelin at 11.3% and Goodyear at 5.8%.

The thermal cycle stays exposed to EV demand swings: Hanon Systems' revenue rose 8.9% from KRW 10.00 trillion in 2024 to KRW 10.88 trillion in 2025, as hybrid demand and European EV sales supported results despite a US policy rollback on electric vehicles. In short, end-market volumes are flat while mix and trade rules create the spread between competitors.

Outlook

Management's stated direction is profitability-led qualitative growth rather than volume expansion. While flagging continued uncertainty in 2026, Hankook raised its target for the revenue share of premium 18-inch-and-above tires to 51% from 50% a year earlier.

Second-quarter 2026 results showed the high-rim share at 49.5% and EV-dedicated tires at 31.8%, close to the annual targets of 51% and 33%.

On capacity, the Tennessee expansion is set to lift passenger-tire capacity from 5.5 million to 11 million units a year in the second half of 2026 and add 1 million units of truck and bus capacity, structurally reducing US tariff exposure.

On pricing, roughly 3% increases were implemented in Europe and Korea early in the year, with a further 2-3% expected in Europe, China, Korea and North America in the second half.

For thermal management, 2026 targets of KRW 11 trillion in revenue, KRW 450 billion in operating profit, a 4% operating margin and KRW 1.2 trillion of EBITDA were set, alongside a stated aim of shifting to a free cash flow structure where EBITDA exceeds outlays.

Over the medium term, the corporate value-up plan targets combined revenue approaching KRW 30 trillion by 2031 with an operating margin above 10%.

On shareholder returns, a board resolution in August 2025 set a policy of gradually raising the payout ratio from about 20% toward as much as 35% over 2025-2027 and introduced the company's first interim dividend.

One open item remains: the European Union is running a separate anti-subsidy (countervailing duty) investigation into China-made tires, which could result in additional duties depending on the outcome.

Valuation

PER

6.6×

PBR

0.6×

ROE

10.0%

EPS

₩9,944

BPS

₩109,989

Dividend per share

₩2,300

The shares currently trade below book value per share, and their earnings-based multiple sits toward the low end versus large-cap Korean averages and global tire peers.

Brokerages have pointed to structural rather than operational reasons for the gap: Daishin Securities said in a May 2026 report that it applied a 10% discount to the global peer average multiple to reflect uncertainty over the Hanon Systems acquisition and governance factors.

LS Securities also said in an April 2026 report that the stock was then trading well below the global peer group multiple.

On target prices, KB Securities analyst Kang Sung-jin was reported to have maintained KRW 80,000 in May 2026, and Daishin Securities maintained a target of KRW 93,000 in a June 12, 2026 note while projecting 2026 tire revenue of KRW 11 trillion and operating profit of KRW 1.9 trillion.

Hanwha Investment & Securities analyst Kim Sung-rae raised his target to KRW 84,000 from KRW 79,000 in a May 20, 2026 report.

On dividends, the value-up plan disclosed in March 2026 cited a 2025 payout ratio of 25.75% and a total dividend amount 15% higher than the prior year, leaving the pace of the move toward a 35% payout and the normalization of Hanon Systems' profit and cash flow at the center of the multiple debate.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Relative position created by the EU duty gap

The EU's final anti-dumping duties on China-made tires were set at 4.3% for Hankook, 24.4% for Kumho and Nexen and 45.3% for Chinese producers. Commentary noted the company was relatively advantaged, since its China-made volumes drew a low rate and it already had European local production through the Hungary plant.

Digital Daily reported in August 2026 that Hankook, facing a comparatively low duty, was expected to secure price competitiveness in Europe. With Europe close to half of revenue, that gap bears on both pricing and share.

Mix improvement and top-tier margins

In the second quarter of 2026 the tire segment posted revenue of KRW 2.81 trillion and operating profit of KRW 483.2 billion for a 17.2% margin. Its 2025 tire operating margin of 17.9% was above Pirelli, Michelin and Goodyear.

A 49.5% high-rim share and 31.8% EV-tire share stand close to annual targets of 51% and 33%, evidence of an ongoing shift to a premium portfolio. In a rising-cost environment, mix and pricing pass-through are the main levers defending margins.

Profit recovery at the thermal unit

The thermal unit's 2025 revenue reached KRW 10.88 trillion and operating profit KRW 271.8 billion, up 8.9% and 184.5% respectively. In the second quarter of 2026 it delivered revenue of KRW 2.88 trillion, operating profit of KRW 103.7 billion and a return to net profit.

Per NICE Investors Service analysis, first-quarter 2026 leverage of 164.6% and borrowing dependence of 34.9% continued an improving trend, while the operating margin rose from 1.0% in 2024 to 2.5% in 2025 and 3.5% in the first quarter of 2026. In the first half of 2026 its credit outlook was revised up from negative to stable.

Bear factors

Cost pressure peaking in the third quarter

Daishin Securities noted synthetic rubber export prices were up 70% and natural rubber 11% from the start of the year as of April 2026, and expected cost pressure to build from the third quarter given input lags.

Korea Investment & Securities assumed the consolidated raw material ratio would rise 2 percentage points from 52% to 54% in the second half, with the third quarter the most burdened.

Forecasts also flagged that rising natural rubber, synthetic rubber and carbon black prices plus freight costs would make margin defense harder in the second half. If price increases lag costs in either timing or magnitude, margin pressure could show up in reported results.

Leverage and interest burden

Consolidated leverage rose from 41.6% in 2024 to 87.6% in 2025, with total liabilities expanding from KRW 4.65 trillion to KRW 12.45 trillion. Reports noted that at the end of the second quarter of 2025 the consolidated ratio hit 101.1%, exceeding 100% for the first time since 2012.

Hanon Systems' short-term borrowings of KRW 2.07 trillion in the first quarter of 2026 far exceeded cash of KRW 848.1 billion, prompting the assessment that some debt needs refinancing.

Net interest expense running at roughly 36% of operating profit in the first quarter of 2026 was cited as a constraint on future investment capacity.

Limits of US localization and an overhang

Estimates indicate that even after the Tennessee expansion reaches full production, more than 50% of US sales volume must still be sourced from overseas.

The Tennessee plant accumulated more than KRW 90 billion of net losses over eight years, and observers noted that local labor costs and input prices make resolving those losses difficult.

In addition, from January 11, 2027 the second-largest shareholder, Hahn & Co Auto Holdings, can exercise a put option on its 40% stake for one month, and the market has discussed the possibility of additional funding and higher borrowing if it is exercised.

Risk factors

Trade and regulation

The European Union is conducting a separate anti-subsidy (countervailing duty) investigation into China-made tires alongside the anti-dumping case, leaving room for additional duties.

In the United States, the company previously moved from a 38.07% anti-dumping rate to 27.05% and later 6.3%, making periodic rate recalculations a recurring variable.

Industry voices noted that since tariff costs cannot be fully passed to consumers or automakers, production reallocation must be paired with pricing strategy.

End-demand and electrification volatility

Domestic tire output and sales fell 7.7% and 6.7% respectively in the first half of 2026. For Hanon Systems, short-term borrowings above KRW 2 trillion and volatility in eco-friendly vehicle demand were assessed as lingering burdens.

Analysts also argued that with global auto growth slowing and EV demand uncertain, the thermal unit must prove sustained earnings power before the acquisition can be fully credited.

Governance perception

Daishin Securities said in a May 2026 report that it applied a 10% discount to the global peer average in setting its target multiple, reflecting acquisition uncertainty and owner risk.

Hana Securities likewise framed its February 2026 assessment of the tire segment's fundamentals against the backdrop of negative governance perceptions. Such perceptions influence multiple discussions separately from earnings, and the actual pace of shareholder return implementation is being watched alongside them.

What to watch next

Late October to early November 2026
Third-quarter 2026 results. Brokerages identified this quarter as the peak of cost pressure, so the tire segment's operating margin will show how far price increases and mix gains offset higher raw material costs.
Fourth quarter of 2026
Ramp-up progress at the expanded Tennessee plant. Whether the second-half increase from 5.5 million to 11 million passenger tires plus 1 million truck and bus units proceeds as planned will determine how much US tariff exposure eases.
Fourth quarter 2026 to early 2027
Outcome of the EU anti-subsidy (countervailing duty) probe into China-made tires. If preferential loans and tax breaks are judged to be unfair support, additional duties beyond the anti-dumping measures could apply, affecting the European supply structure.
About one month from January 11, 2027
The window in which second-largest shareholder Hahn & Co Auto Holdings may exercise a put option on its 40% stake; the market has discussed potential additional funding and higher borrowing if it is exercised.
February to March 2027
Fiscal 2026 full-year results and the dividend decision. This is the point to check the implementation path of the policy to raise the payout ratio gradually from about 20% toward as much as 35% over 2025-2027.

Overall view

Hankook Tire & Technology's revenue scale expanded to KRW 21.20 trillion in 2025 as the thermal management unit was consolidated, but the consolidated operating margin diluted to 8.7% from 18.7% in 2024.

Operating profit over the latest four quarters (third quarter 2025 through second quarter 2026) totaled about KRW 2.20 trillion, with margins holding near double digits after the weak second quarter of 2025.

Bullish factors include a trade position in which the EU's final anti-dumping rate of 4.3% is far below competitors', margin strength shown by a 17.2% tire operating margin in the second quarter of 2026, and the thermal unit's return to net profit.

Bearish factors include raw material pressure expected to peak in the third quarter, consolidated leverage rising from 41.6% in 2024 to 87.6% in 2025, and the put option window for the second-largest shareholder in January 2027.

The company has set a 51% target for the high-rim revenue share and 2026 thermal-unit goals of KRW 11 trillion in revenue and KRW 450 billion in operating profit, and is pursuing a policy to lift the payout ratio to as much as 35%.

The focus for observers is therefore how much of the cost increase price hikes absorb, whether the Tennessee ramp-up proceeds on schedule, and whether the thermal unit's cash flow outgrows its interest burden. This report is for information purposes only and contains no buy or sell opinion or target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.