In the volatile theater of the stock market, there are moments when a company's fundamental value and its market price diverge so significantly that the eventual correction feels less like a gradual climb and more like a volcanic eruption. On February 5, 2026, Nexen Tire provided investors with exactly such a spectacle. The stock surged nearly 11% during intraday trading, touching a 52-week high of 8,920 won, before settling with a substantial 9.7% gain at 8,820 won. For a manufacturing heavyweight in a mature industry, such volatility is rare. However, for those who have been closely monitoring the intersection of Nexen Tire's technical indicators and its valuation metrics, this move was not a surprise—it was a long-awaited validation. Today, we peel back the layers of this rally to understand why the market is finally waking up to a stock that analysts are calling "cheaper than the tires they sell."
To understand the magnitude of the current movement, we must first look at the milestone that serves as the bedrock of this rally. Nexen Tire has officially entered the "3 Trillion Won Club." Achieving 3.2 trillion won in revenue for 2025 is not merely a numerical achievement; it represents five consecutive years of record-breaking sales. In an era marked by global supply chain disruptions, fluctuating raw material costs, and geopolitical instability, such consistent top-line growth is a testament to the company's resilience. The market often rewards growth stocks, but it eventually bows down to consistency. The entry into the 3 trillion won revenue tier signals that Nexen Tire has graduated from being a mid-sized challenger to a global heavyweight capable of sustaining scale even in adverse conditions. This fundamental strength provides the rationale for the re-rating we are currently witnessing.
However, revenue figures alone do not explain the sudden ferocity of the buying pressure. The catalyst lies in the glaring disconnect between the company's performance and its valuation. As noted by Hana Securities analyst Song Sun-jae, the stock is currently trading at a Price-to-Earnings (P/E) ratio of approximately 5x and a Price-to-Book (P/B) ratio of just 0.3x. In the world of financial analysis, a P/B of 0.3x implies that the market values the company at only 30% of its liquidation value. Essentially, investors are buying 1,000 won worth of net assets for 300 won. This is a level of undervaluation typically reserved for companies in distress or facing existential threats, not for a firm posting record revenues. The phrase "stock price cheaper than tires" is not just hyperbole; it is a mathematical reality. The market seems to have realized that this valuation anomaly cannot persist, especially as the company projects a 26% year-over-year increase in operating profit for 2026.
From a technical perspective, the charts are painting a picture of a stock that has gathered enough energy to break through its shackles. The Relative Strength Index (RSI) for the past 14 days stands at 66.94. This is a fascinating level for technical traders. An RSI above 70 is typically considered "overbought," suggesting a potential pullback, while an RSI below 30 indicates "oversold" conditions. At 66.94, Nexen Tire is in the "sweet spot" of strong bullish momentum. It indicates that buying pressure is dominant and aggressive, yet it hasn't quite reached the hysterical levels that often precede a crash. The stock is running hot, but not overheating. Furthermore, the proprietary analysis score of 78 suggests a high-quality setup, combining momentum with fundamental stability. The recent 9.7% price jump accompanied by heavy volume indicates a decisive breakout, likely clearing out the overhang of selling pressure that has suppressed the stock for months.
The outlook for 2026, described by Hyundai Securities as the "year of recovery," adds fuel to this technical fire. The core driver of this optimism is the normalization and expansion of the Czech factory. For tire manufacturers, capacity utilization is the holy grail of profitability. Fixed costs in this industry are massive; therefore, once a factory passes its break-even utilization rate, every additional tire sold contributes disproportionately to the bottom line—a phenomenon known as operating leverage. The expectation is that the Czech plant will ramp up production, directly feeding the high-demand European market. This geographical diversification is crucial. By producing in Europe for Europe, Nexen mitigates shipping risks and tariff barriers, positioning itself to capture better margins. The company's target of 3.3 trillion won in revenue and high single-digit operating margins for 2026 is ambitious yet grounded in this expanded capacity.
We must also consider the "Smart Money" flow. In the week leading up to this surge, foreign investors net purchased 147,109 shares. In the Korean stock market, foreign capital often acts as a leading indicator for structural turnarounds. While domestic institutions sold off some shares, the aggressive entry of foreign capital suggests a conviction in the global competitiveness of Nexen's valuation. Foreign investors tend to focus heavily on P/B ratios and global peer comparisons. When they see a Korean manufacturer trading at a fraction of the multiples commanded by global peers like Michelin or Bridgestone, despite growing revenues, they see a classic value arbitrage opportunity. The recent price action confirms that this view is gaining traction.
Furthermore, the strategic shift in Nexen Tire's product mix deserves attention. The company is not just selling more tires; it is selling better tires. The expansion of the all-weather tire lineup is a strategic masterstroke. These products command higher margins and are seeing surging demand in markets grappling with unpredictable climate patterns. Additionally, the focus on high-inch tires (18 inches and above) continues to improve the average selling price (ASP). This mix improvement is a critical buffer against cost pressures. Even if raw material costs fluctuate, selling premium products ensures that profit margins remain resilient. This qualitative improvement in revenue, rather than just quantitative growth, is what justifies the target price upgrades to 9,600 won and 10,500 won by major brokerages.
However, a responsible analysis must always weigh the risks. Why was the stock so cheap in the first place? The tire industry is notoriously sensitive to external headwinds. Ocean freight costs and raw material prices (like natural and synthetic rubber) are the primary enemies of profitability. The recent geopolitical tensions affecting shipping routes (such as the Red Sea crisis) and potential tariff hikes are legitimate concerns. These factors can erode margins overnight. Yet, ironically, the current economic climate of high inflation and uncertainty might actually favor Nexen Tire. In tough economic times, consumers often trade down from premium tier-1 brands to tier-2 brands that offer comparable quality at a lower price point. Nexen sits perfectly in this "value-for-money" segment. Thus, while logistics costs are a risk, the demand side remains robust due to this substitution effect.
It is also worth noting the psychological aspect of the current market. The "Korea Discount"—the tendency for Korean companies to be undervalued due to governance or geopolitical concerns—is a well-known phenomenon. However, the government's recent "Corporate Value-up Program" initiatives have put pressure on companies with low P/B ratios to enhance shareholder value. With a P/B of 0.3x, Nexen Tire is a prime candidate for such value-up strategies. Whether through increased dividends or share buybacks, the pressure to rectify this undervaluation is coming not just from the market, but from the regulatory environment as well.
In conclusion, the recent surge in Nexen Tire is not a random fluctuation but a rational re-pricing of a deeply undervalued asset. The convergence of technical breakout signals (RSI 66.94, price surge), fundamental solidity (3 trillion won revenue club), and extreme undervaluation (P/E 5x) creates a compelling narrative for investors. The stock offers a rare combination of value protection—due to its low multiples—and growth potential, driven by the Czech factory expansion and margin recovery. With analyst targets suggesting an upside potential of over 20% even from current levels, the stock appears to have room to run. While external risks regarding logistics and costs remain, the company's proven resilience over the last five years suggests it is well-equipped to navigate them. For investors looking for a stock that has been asleep at the wheel but is now waking up with a heavy foot on the accelerator, Nexen Tire presents one of the most intriguing opportunities in the current market landscape.