[Click eStock] "Hansol Chemical, Strong Profit Momentum Expected in Q4"

[Asia Economy Reporter Song Hwajeong] KB Securities maintained its 'Buy' rating and target price of 350,000 KRW for Hansol Chemical on the 16th, expecting a strong profit momentum in the fourth quarter of this year.

Hansol Chemical's operating profit in the fourth quarter (58.5 billion KRW) is expected to increase 2.9 times compared to the average fourth-quarter operating profit (20.2 billion KRW) over the past three years, showing a different performance pattern from before. Until now, Hansol Chemical's operating profit has sharply declined in the fourth quarter after peaking in the third quarter, due to year-end bonuses. Over the past three years, the fourth-quarter operating profit has decreased by an average of 49% compared to the previous quarter and increased by 25% year-on-year. However, even considering the year-end bonuses (20 billion KRW) this year, operating profit is expected to increase from the first quarter low to the fourth quarter, breaking away from the past performance pattern for the first time in seven years since 2014. The estimated quarterly operating profits for this year are 52.2 billion KRW in Q1, 53.7 billion KRW in Q2, 57.8 billion KRW in Q3, and 58.5 billion KRW in Q4. Dongwon Kim, a researcher at KB Securities, explained, "As semiconductor material performance improves in the second half, from the fourth quarter, sales of electric vehicle materials, quantum dot (QD) materials, and NB latex will simultaneously surge, creating strong profit momentum." KB Securities revised Hansol Chemical's operating profit forecasts upward to 222.2 billion KRW for this year and 269.7 billion KRW for next year.

Recently, electric vehicle material companies' stock prices have risen sharply, but Hansol Chemical has been relatively overlooked. Over the past month, the average stock price increase of five electric vehicle material companies was 30.1% (EcoPro BM 41.2%, SK IE Technology 36.8%, Chunbo 30.5%, L&F 28.9%, POSCO Chemical 13.4%), while Hansol Chemical's stock price declined. Researcher Kim said, "Hansol Chemical's operating profit proportion from electric vehicle materials is expanding, and its electric vehicle material lineup is increasing every year. Especially, based on estimated 2022 performance, the price-to-earnings ratio (PER) of the five electric vehicle material companies averages 55.7 times, trading at a 4.4 times premium compared to Hansol Chemical's PER of 12.5 times, which will act as a strong catalyst for Hansol Chemical's stock price increase in the future."

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