[Click eStock] "Hucems, MNB Long-term Supply Contract Offsets Negative Effects"

Hucems Signs MNB Supply Contract Worth 3.7 Trillion KRW Over 15 Years
Daishin Securities "Hucems Raises Target Price from 30,000 KRW to 31,500 KRW"

(Provided by Daishin Securities)

[Asia Economy Reporter Gong Byung-sun] Huchems, which recently signed a supply contract for Mononitrobenzene (MNB), is expected to offset concerns related to Hanwha Solutions' self-production of nitrate derivatives (DNT). The rise in carbon emission credit prices is also anticipated to contribute to growth.

On the 26th, Daishin Securities maintained a 'Buy' rating for Huchems and raised the target price from 30,000 KRW to 31,500 KRW. This marks an increase in the target price after about eight months since it was last maintained earlier this year. Huchems' closing price yesterday was 27,450 KRW.

The MNB supply contract is expected to be a growth driver. On the 25th, Huchems announced that it had signed a long-term supply contract for MNB worth a total of 3.7 trillion KRW over 15 years from 2024 to 2038. Sangwon Han, a researcher at Daishin Securities, explained, "This contract is expected to generate an average annual sales of 250 billion KRW," adding, "Although concerns expanded following Hanwha Solutions' announcement of its DNT self-production plan, the new contract will offset the negative effects."

The rise in carbon emission credit prices is also expected to have a positive impact. Since the beginning of this month, the trading volume of KAU21 has increased along with its price. On the 11th, KAU21 hit the upper limit price and has currently risen to 30,000 KRW per ton. Last month, it was traded around an average of 20,000 KRW. Considering that European emission credit prices are more than twice those in Korea and that the third phase plan period is starting in earnest, emission credit prices are expected to rise further.

(Provided by Daishin Securities)

However, Daishin Securities forecasted that Huchems' operating profit for the third quarter would decrease by 17% compared to the previous quarter, recording 22.6 billion KRW. This is 12.4% below the market consensus of 25.8 billion KRW. Researcher Han said, "Although emission credit prices have recently rebounded, they are still lower than expected," adding, "Profitability is also expected to weaken compared to the previous quarter due to the weak spread of Toluene Diisocyanate (TDI)."

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