[Featured Stock] Kolon Plastics Rises on Expansion of Electric and Hydrogen Vehicle Materials Multiples... Record High Performance Through Price Increases

[Asia Economy Reporter Hyungsoo Park] Kolon Plastics is showing strong performance. The prospect of achieving the largest quarterly earnings in history for Q3 this year appears to have influenced the stock price.

As of 9:06 AM on the 2nd, Kolon Plastics is trading at 8,800 KRW, up 16.25% from the previous day.

Shinhan Financial Investment estimated that Kolon Plastics will achieve sales of 118.4 billion KRW and operating profit of 10.5 billion KRW in Q3. This represents an increase of 18.3% and 27.4%, respectively, compared to the previous quarter. Compared to the same period last year, sales increased by 54.2%, and operating profit surged by 12,763.2%.

Researcher Jinmyung Lee of Shinhan Financial Investment explained, "Despite rising raw material and freight costs, the improvement in performance will continue due to price increases driven by tight supply and demand." He added, "Sales in the POM division are expected to increase by 30% to 71.1 billion KRW," noting, "Strong demand in the automotive and home appliance sectors and the discovery of new customers are expected to drive increases in sales volume and prices."

Lee also analyzed, "POM production capacity ranks third worldwide, and tight supply and demand will continue due to limited expansion compared to future demand growth," adding, "The goal is to secure more than 200 new customers by 2025."

He emphasized, "Expansion is inevitable," and stated, "Based on excellent technology and references from partners (BASF), we plan to expand our customer base mainly in North America and Europe, where profitability is high."

Expectations for electric vehicle and hydrogen vehicle component materials are also growing. Lee predicted, "The spread of eco-friendly vehicles is expected to reshape the automotive parts market," forecasting, "The electric vehicle EP market will grow at an average annual rate of 36% until 2028." He introduced, "Kolon Plastics' POM is used in electric vehicle motor gears, PA in battery packs, and PBT in high-voltage connectors," and added, "Hydrogen materials are currently being developed for hydrogen vehicle tank parts (liners) and hydrogen vehicle housing materials."

Furthermore, he noted, "Non-metallic liners (plastics) applied to Type 4 currently rely entirely on imports," and added, "A consortium with automotive, materials, and carbon fiber companies is conducting business with a development target set for 2023."

He analyzed, "The average PER during the price increase period amid the past industry boom from 2016 to 2018 was 17 times," and "The current stock price is only 11 times based on 2021-2022 performance." He expressed expectations, saying, "Stock price re-rating is possible due to performance improvement through price increases and multiple expansion driven by the expansion of eco-friendly vehicle materials."

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