[Click e Stocks] Lotte Chemical's Shift to 'Hydrogen'

[Asia Economy Reporter Junho Hwang] NH Investment & Securities maintained a buy rating and a target price of 380,000 KRW on the 9th, stating that Lotte Chemical is concretizing its mid- to long-term strategy for the hydrogen business.

Lotte Chemical plans to make a cumulative investment of 2 trillion KRW by 2025 to achieve annual sales of 600 billion KRW. By 2030, the goal is to invest a total of 4.4 trillion KRW and reach sales of 3 trillion KRW. The sales proportion by sector allocates 40% each to hydrogen refueling stations and power plant businesses. The remaining 20% is assigned to the hydrogen tank business. To this end, the company is strengthening cooperation with firms such as Air Liquide and SK Gas, as well as developing technology in-house.

On the other hand, the business saw high profitability in the first half of the year due to tight supply, but it is expected to slow down somewhat in the second half due to increased global supply.

Operating profit in the second quarter was 594 billion KRW, in line with expectations, marking a 1,704% increase compared to the previous year. In the olefin business, despite an opportunity loss of about 60 billion KRW due to minor maintenance at the Daesan plant, a solid operating profit of 271 billion KRW (operating margin 14.3%) was recorded. LC Titan, which has a similar product lineup, also achieved an operating profit of 119.9 billion KRW (operating margin 17.3%) due to strong demand and tight supply. Both sectors are expected to see reduced profitability in the second half as spreads narrow with the influx of new capacity.

Hwang Yusik, a researcher at NH Investment & Securities, said, "Operating profit for the third quarter this year is expected to decrease to 480 billion KRW," adding, "While demand for chemical products will remain firm, increased supply of ethylene and propylene in the region is expected to reduce the performance of olefins and LC Titan." He further forecasted, "In advanced materials, sales volume will increase during the traditional peak season, but spreads will narrow due to continuous rises in raw material prices and weakening demand in China."

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