[Click eStock] "OCI Needs Time to Increase Corporate Value... Target Price Down"

[Asia Economy Reporter Eunmo Koo] KB Securities analyzed that OCI's operating loss will continue in the first quarter of this year and that time is needed for an increase in corporate value. The target stock price was also lowered from 70,000 won to 41,000 won.

On the 30th, KB Securities researcher Youngchan Baek estimated in a report that OCI's first-quarter sales will be 575.3 billion won, a 10.4% decrease compared to the same period last year, and the operating loss will be 49 billion won, continuing the operating deficit and meeting market expectations. The first-quarter basic chemicals segment is expected to have sales of 272 billion won, a 13.1% decrease from the previous quarter, with an operating loss of 50.4 billion won. The first-quarter polysilicon selling price is expected to fall by 2.3% compared to the previous quarter, and sales volume is judged to have decreased by 5-10% due to the shutdown of the Korean polysilicon plant starting in February. The petrochemical and carbon materials operating profit for the first quarter is expected to turn positive to 5.7 billion won compared to the previous quarter but shrink by 65.9% compared to the same period last year. It was explained that profit growth is limited due to price declines in major products such as carbon black, benzene, and TDI.

The diagnosis is that time is needed for an increase in corporate value. OCI has suspended operations at the Gunsan polysilicon plant since last month. Only the P1 plant is scheduled to resume operations from May. Going forward, polysilicon for solar power will be handled by the Malaysian plant (OCI MSB), and the Gunsan P1 plant plans to focus on producing polysilicon for semiconductors. Researcher Baek evaluated, “Considering China's aggressive expansion plans for solar polysilicon, this is a tough but correct direction.” However, he added, “There are still issues to resolve such as increasing solar polysilicon sales volume and workforce reallocation,” and predicted, “In the long term, profitability of the polysilicon business is likely to improve.” However, he explained that patience is required to enhance corporate value.

The target stock price was lowered by 41.4% from the previous 70,000 won to 41,000 won. Researcher Baek said, “The basis for lowering the target price is the downward revision of earnings estimates,” and explained, “This is because the earnings estimates were lowered due to changes in the assumed polysilicon selling price for 2020-2021 (previous 2020E $9.5 → new $8.3), reflecting a decrease in performance, which led to a downward revision of the previous earnings per share (EPS) estimates.”

This content was produced with the assistance of AI translation services.