[Click eStock] "Lotte Chemical, Operating Profit Expected to Increase by 165%"
[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities announced on the 7th that it raised the target price for Lotte Chemical from the previous 110,000 KRW to 117,000 KRW, considering the improvement in earnings.
![[Click eStock] "Lotte Chemical, Operating Profit Expected to Increase by 165%"](http://www.asiae.co.kr/news/img_view.htm?img=2021100708150056689_1633562100.jpg)
Lotte Chemical's operating profit for the third quarter of this year is expected to be 67.2 billion KRW, an increase of 159.6% compared to the same period last year, surpassing market expectations (65.5 billion KRW). The improvement is anticipated across all business sectors, including green materials and chemicals.
Among chlorine series, ECH is estimated to have generated approximately 13 billion KRW in additional profit due to a shortage in the supply of front-end epoxy resin. Caustic soda prices in the region rose by more than 20% quarter-on-quarter in Q3, influenced by the impact of hurricanes in the U.S., regular maintenance of regional companies, and supply shortages caused by power outages in China.
Ammonia prices in the region increased by more than 12% quarter-on-quarter in Q3 due to increased intermediary trade, improved demand for caprolactam/AN, and seasonal peak demand. Despite rising logistics costs, the green materials sector is expected to see profit growth quarter-on-quarter, supported by favorable exchange rate effects for export-oriented businesses.
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Researcher Lee Dong-wook of Kiwoom Securities stated, "Lotte Chemical has an ammonia storage capacity of 93,000 tons and is the leading domestic ammonia operator, holding 60-70% of the domestic ammonia market (approximately 1.4 million tons)." He added, "Based on this market share and infrastructure, the company is expanding its entry into the high-growth green ammonia business." Notably, Lotte Chemical has formed a consortium for green ammonia maritime transport and bunkering with HMM and POSCO, and last month signed an MOU with Transammonia (Trammo) for the first domestic green ammonia supply agreement.
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