[Click eStock] Chemical Sector Enters Phase Requiring Attention... Pure Emulsion Stocks More Attractive↑

[Asia Economy Reporter Lee Seon-ae] Daishin Securities judged on the 22nd that the chemical industry as a whole has entered a phase requiring attention, and especially suggested an investment strategy focusing on pure petrochemical stocks.

Hansangwon, a researcher at Daishin Securities, said, "Attention should be paid to the chemical industry as a whole, and the key is not the US production disruption but the demand increase following economic recovery after the Lunar New Year," adding, "From the perspective of valuation rerating due to market improvement, we recommend an approach centered on pure petrochemical stocks such as Lotte Chemical, Kumho Petrochemical, and Daehan Petrochemical."

Lotte Chemical is the leading NCC stock and the biggest beneficiary of improvements in the chemical market and MEG. Additionally, its growth strategy through eco-friendly (recycling) initiatives and M&A is positive. In particular, Lotte Chemical, along with Lotte Fine Chemical and Huchems, has been underperforming over the past three months, so it is judged to have high upside potential. Considering that Lotte Fine Chemical and Huchems have completely halted production facilities for ECH and TDI in the US, it is a time to increase interest in the short term. Kumho Petrochemical still has a 12-month forward price-to-earnings ratio (PER) of around 7 times despite the stock price rise due to the NB latex boom and management disputes. Daehan Petrochemical is an NCC company, but since about 25% of its profit contribution comes from high-growth and high-profit secondary battery separator products, there is sufficient room for stock price rerating. Regarding solar power, we recommend a strategy of simultaneously holding Hanwha Solutions (cell/module) and OCI (polysilicon).

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