[Click eStock] "Management Dispute at Kumho Petrochemical, 1Q Operating Profit 513.6 Billion KRW... Up 286% YoY"

Improvement in Performance Across All Sectors... Noticeable Effects of Business Portfolio Enhancement

On the 11th, an executive press conference with Park Cheol-wan was held at the Westin Chosun Hotel in Jung-gu, Seoul, under the theme "Proposals to Enhance the Corporate Value of Kumho Petrochemical." / Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Minwoo Lee] Kumho Petrochemical, which is undergoing a management rights dispute, is expected to record an operating profit of over 500 billion KRW in the first quarter of this year. It is analyzed that the company will achieve results far exceeding expectations across all business divisions due to the steady improvement of its business portfolio.

On the 22nd, Kiwoom Securities forecast that Kumho Petrochemical will record consolidated sales of 1.763 trillion KRW and an operating profit of 513.6 billion KRW in the first quarter of this year. Compared to the same period last year, sales are expected to increase by 43.9% and operating profit by 285.8%. These figures also significantly exceed the market consensus of 1.4756 trillion KRW in sales and 345.4 billion KRW in operating profit. Notably, the operating profit is close to 70% of last year's annual operating profit. Researcher Dongwook Lee of Kiwoom Securities explained, "By continuously improving the business portfolio, all business divisions have grown evenly."

In the synthetic rubber division, operating profit is expected to increase by 342.9% year-on-year to 291 billion KRW. Lee said, "With the effect of capacity expansion reflected and a tight supply-demand situation continuing, NB latex prices and spreads improved by more than 20% compared to the previous quarter," adding, "Due to improvements in the automotive and tire sectors, prices of general-purpose rubbers such as BR and SBR also rose by more than 20% compared to the previous quarter."

The synthetic resin division's operating profit is also expected to increase by 114.1% year-on-year to 55 billion KRW. Lee analyzed, "Despite the slowdown in polypropylene glycol (PPG) spreads, ABS, PS, SAN, and EPS continued to benefit from favorable conditions in the automotive, home appliance, and toy sectors."

The phenol derivatives division's operating profit is estimated to have surged by a whopping 926.4% compared to the first quarter of last year, reaching 142.7 billion KRW. This is due to production disruptions among domestic and international competitors and a sharp increase in demand from China and other countries. In particular, epoxy resin, which benefits from integrated raw material effects compared to domestic competitors, is estimated to have seen export prices rise by about 40% or more year-on-year in the first quarter due to plant accidents at Chinese companies and increased volumes related to wind turbine blades.

Additionally, the energy division's operating profit is expected to improve significantly due to a 35.3% surge in the System Marginal Price (SMP) following the rise in oil prices, along with a base effect in volume from regular maintenance conducted in the previous quarter.

Against this backdrop, Kiwoom Securities maintained a "Buy" investment rating and a target price of 460,000 KRW for Kumho Petrochemical. The closing price on the previous trading day was 233,500 KRW.

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