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| Hyosung TNC's factory in Ulsan is on fire, Sunday. Courtesy of Ulsan Fire Department |
By Park Jae-hyuk
Hyosung TNC's stock price plummeted 6.83 percent to 443,000 won, Monday, following a fire that gutted two buildings at its manufacturing facility in Ulsan.
Investors dumped their shares in fear of a potential setback to its production, despite the expectation of the fiber manufacturer's operating profit for last year to hit a record high of 1.4 trillion won ($1.17 billion).
The forthcoming going into effect of the Serious Accident Punishment Act this week has been viewed as another unfavorable factor affecting the investor sentiment, because the new law states that the owner or chief manager of a business can face a jail term if a fatal industrial accident occurs when that business' workplace does not take the required safety measures.
According to firefighters, the blaze is presumed to have broken out on Sunday evening from the factory building's air conditioning room and spread to a nearby warehouse storing nylon yarn.
The firefighters are investigating the cause of the fire and the amount of damage. As of Monday afternoon, no deaths were reported, although two of the factory workers were hospitalized after inhaling smoke, while trying to extinguish the fire in the early stages.
Hyosung TNC said it will cope with the recent accident in accordance with its contingency plan.
"It is difficult to completely deny setbacks in our production, but our other production lines in Ulsan, Gumi and Vietnam will offset the losses," a company spokesperson said. "Those production lines are capable of producing nylon yarn of fine quality."
Securities analysts expect the fire to have a limited impact on Hyosung TNC's earnings.
"The fire broke out at a factory producing nylon yarn, so it will not affect the production of the company's flagship products ― spandex and polyester," Kiwoom Securities analyst, Lee Dong-wook, said.
Hanwha Investment & Securities analyst Chun Woo-jae expected insurers to compensate Hyosung TNC for its losses, as they did two years ago following a fire at Lotte Chemical's factory in Seosan, North Chungcheong Province.
The analyst, however, warned about growing concerns among investors over the company's preparedness for the Serious Accident Punishment Act.
