[Click eStock] "SKC, Rapid Surge in Demand for Key Products... Target Price Up"

[Asia Economy Reporter Park Jihwan] Heungkuk Securities maintained a 'Buy' rating on SKC on the 20th, citing steady growth in chemical business performance and an expected expansion in demand for battery copper foil driven by the surging electric vehicle demand. The target price was raised by 54.5% from the previous 110,000 KRW to 170,000 KRW.

Choi Jongkyung, a researcher at Heungkuk Securities, explained, "In Q1 this year, sales increased by 23.6% year-on-year to 784.6 billion KRW," and "operating profit rose 172.7% to 81.8 billion KRW." During the same period, the chemical business recorded an operating profit of 56.0 billion KRW, up 220%. It is evaluated that the PO/PG spread expanded and the proportion of high value-added PG sales increased, leading to improved profitability.

The Mobility business posted sales of 142.0 billion KRW, up 99.2% year-on-year. Researcher Choi said, "This was the highest quarterly sales, and operating profit declined compared to the previous quarter due to increased labor costs from factory expansion." The Industry business saw operating profit rise 21.3% to 14.8 billion KRW, with improved profitability attributed to favorable market conditions in China.

Researcher Choi emphasized, "Following Q1, the growth trend is expected to continue into Q2," adding, "The chemical business is entering its peak season in Q2, and limited expansion of global competitive facilities is expected to sustain a high level of PO spread." Additionally, the global economic recovery is also positive for the continued high profitability of the chemical business in Q2.

He forecasted, "The Mobility business is expected to gradually improve profitability, and battery copper foil prices are rising rapidly," adding, "From the second half of the year, full-scale volume sales will be possible through commercial operation of Jeongeup 5 Plant (9,000 tons)." The 6th plant (9,000 tons) is also expected to start operation from the second half of next year.

Researcher Choi also noted, "The Malaysia plant is scheduled to begin partial line mass production from the second half of 2023," and predicted, "Profitability is expected to improve with increased volume."

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