[Click eStock] "Kumho Petrochemical, Forecasts Highest Profit in 10 Years This Year... Target Price Up 9%"

[Asia Economy Reporter Park Ji-hwan] Hana Financial Investment maintained a 'Buy' rating on Kumho Petrochemical on the 16th, projecting the highest profit in 10 years this year due to strong phenol performance, and raised the target price by 9.09% from the previous 110,000 KRW to 120,000 KRW.

Yoon Jae-sung, a researcher at Hana Financial Investment, analyzed, "Kumho Petrochemical's operating profit for the second quarter is expected to be 120.8 billion KRW, a 13% decrease compared to the same period last year, but the decline is limited as losses in synthetic rubber and energy are offset by gains in synthetic resin and phenol derivatives." He added, "Specifically, synthetic resin is expected to remain similar to the previous quarter due to improved margins in ABS and PS, but energy is disappointing due to reduced volume from scheduled maintenance."

However, a clear improvement in performance is expected from the second half of the year. Researcher Yoon said, "Operating profit in the third quarter is expected to increase by 41% compared to the previous quarter and by 147% year-on-year," and "performance improvement across all business divisions is anticipated based on volume recovery and margin improvement."

Energy is expected to normalize as the effects of scheduled maintenance are removed. He predicted, "Phenol derivatives will reflect the sharp increase in acetone margins in April and May as well as the recent surge in BPA and phenol," and "synthetic resin is also expected to fully reflect the recent improvement in ABS and PS margins."

Researcher Yoon stated, "This year is expected to see the highest profit in 10 years," and added, "Considering the potential demand improvement from the resumption of operations by automobile and tire manufacturers and the mid-to-long-term growth potential of NB Latex, further performance improvement is possible next year as well."

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