Deutsche Bank launches coverage of Korean tyre makers

ERJ staff report (DS)

Seoul -- Deutsche Bank Korea has launched coverage of three Korean tyre makers: Hankook, Nexen and Kumho.

The initial report is very bullish on the Korean tyre industry, saying, "The top 3 global tire makers continue to lose market share, having lost 10ppt in

the past ten years. On the other hand, we expect the global market share of

Korea's three tire makers to rise to 7.2% by 2010 from 5.5% in 2008 (by revenue).

Although raw material price rises remain a concern, we are positive on tire

makers' ability to raise prices in the key markets. Kumho Tire recently raised prices

in the US, and we expect Hankook and Nexen to follow suit in the near future. We

also believe that the positive impact from product mix improvement (higher

replacement sales) will help to offset higher raw material costs."

Specifically, DB says Hankook and Nexen are a 'buy', while Kumho is a 'hold'