[Click eStock] "SKC Finds a Way Out of Chemical and Semiconductor Material Supply Shortages"

Supply Issues in Chemical Sector Due to Cold Wave... Linked to High Operating Profit
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[Asia Economy Reporter Gong Byung-sun] SKC's operating profit is expected to increase significantly, driven by improved performance in the chemical sector and the expansion effect in the mobility materials sector. Kiwoom Securities reflected this by raising SKC's target stock price from the previous 115,000 KRW to 180,000 KRW. The investment opinion was maintained as 'Buy.'

According to Kiwoom Securities on the 17th, SKC is expected to record high operating profits in the chemical sector in the first half of this year. Overseas competitors suffered damage due to the cold wave, causing supply and demand issues for propylene oxide (PO) and polyurethane (PU). Additionally, demand for hygienic propylene glycol (PG) increased due to COVID-19. Researcher Lee Dong-wook of Kiwoom Securities said, "SKC's chemical sector operating profit in Q1 this year is expected to reach 38 billion KRW, a 117% increase compared to the same period last year."

Operating profit in the semiconductor materials sector is also expected to increase. Recently, the semiconductor supply issue has improved the business environment. Moreover, major customers are expanding facilities, which is expected to increase demand in the ceramics field, while expansions in chemical and chemical mechanical polishing (CMP) pads are expected to sufficiently meet supply. The researcher predicted, "Operating profit in the semiconductor materials sector in Q1 this year will be 5.3 billion KRW, a 382.7% increase compared to the same period last year."

The mobility materials sector is also promising. Kiwoom Securities forecasted SKC's mobility materials sector operating profit to decrease by 9.5% quarter-on-quarter to 16.2 billion KRW. However, this reflects some costs such as labor expenses being preemptively accounted for due to rising copper prices and the expansion of copper foil production in the second half of the year. Due to the rapid increase in electric vehicle sales, global copper foil supply is expected to remain tight. Additionally, the tax reduction effect from entering Malaysia is expected to last more than 10 years, increasing the after-tax profit of the consolidated copper foil business.

Researcher Lee said, "Although recent issues such as trading suspension have arisen, tight copper foil supply due to the surge in electric vehicle sales, the corporate tax reduction effect, and the expansion effect of the Jeongeup plant in the second half of this year are expected. SKC Solmics will play a role similar to SK Materials in the semiconductor materials sector in the mid-term," adding, "I maintain an optimistic view."

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