[Click eStock] "Hyosung Chemical, Stock Price Not Reflecting Corporate Value... Target Price Up 65%"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities maintained a 'Buy' rating on Hyosung Chemical on the 3rd, stating that the current stock price level does not properly reflect the company's value, and raised the target price by 65% from the previous 200,000 KRW to 330,000 KRW.

Researcher Dongwook Lee of Kiwoom Securities said, "Currently, NF3 (Nitrogen trifluoride) is in a situation where it cannot be sold due to the improvement in the semiconductor and display industries, which are the front-end industries," and added, "Hyosung Chemical is the world's second-largest NF3 company, and although its margin rate is lower compared to the world's number one company, the margin gap has rapidly narrowed since 2019." Hyosung Chemical's NF3 production capacity is 4,550 tons, ranking second in the world market share after SK Materials.

Hyosung Chemical's NF3 margin rate this year is estimated to be in the high 20% range. The researcher believes it is time to reflect the value of NF3, which is recording high profitability. The operating value of NF3 is evaluated at 331.5 billion KRW (a 30% discount compared to competing companies' multiples), which accounts for 57% of the current market capitalization. Also, even when applying a 30% discount to SK Materials' NF3 market capitalization per ton (111.2 billion KRW), a similar value is derived.

The favorable NF3 market conditions have continued since the second quarter of last year. There have been troubles such as fires at competitors, and solid demand flow continues due to improvements in the semiconductor and display industries. He stated, "After SK Materials expanded by 1,500 tons and China's PERIC by 3,000 tons last year, there are no expansion plans for the NF3 Top-3 this year."

He added, "Recently, production know-how and process improvements have been underway, reducing manufacturing costs," and stated, "It appears that the value of NF3 is not reflected at all in the current market capitalization."

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