'Fine Dust Returns'... Clean & Science, Has It Hit Bottom?

[Asia Economy Reporter Ji Yeon-jin] Recently, due to the power shortage, factory operating rates in China have dropped, resulting in continued clear skies. However, with forecasts of increased coal demand this winter due to the cold wave and China's economic stimulus measures, attention is focused on whether the corporate value of Clean & Science will rise.

According to the Korea Exchange on the 30th, Semisisco recorded a 52-week low of 16,000 KRW during trading on the 5th of this month, then showed an upward trend before experiencing three consecutive days of decline starting from the 27th.

Clean & Science, established in 1973 and listed on the KOSDAQ market in 2000, is a filter manufacturing specialist company. In its early years, it mainly produced filters for automobiles and industrial use, but since 2016, it has shifted its main business to manufacturing household filters centered on air purifiers. As of the first half of this year, the sales composition was 67.1% filters, 8.7% Melt Blown (mask filters), 20.1% filtration materials, and 4.0% others.

The domestic air purifier market size grew rapidly from 500,000 units in 2014 to 3.5 million units in 2020, a sevenfold increase over six years. Accordingly, competition in the air purifier market has been fierce. However, the number of companies manufacturing the core filters used in air purifiers is limited, and Clean & Science holds about a 70% market share in the domestic air purifier filter market.

The company made new investments in mask production facilities last year, but due to an oversupply of masks, impairment losses on tangible assets occurred amounting to 4.4 billion KRW in Q4 of last year and 2.1 billion KRW in Q2 of this year. This performance slump caused the stock price to fall about 50% from its peak last year.

Recently, due to the impact of China's power shortage, there was no momentum for stock price increases as fine dust issues were absent. However, with La Ni?a (an abnormal weather phenomenon) bringing a colder-than-average winter, coal heating demand is expected to rise. Additionally, due to recent weak economic indicators, the Chinese government is likely to implement stimulus measures, potentially increasing the operating rate of coal-fired power plants, which could bring back fine dust concerns.

Researcher Kim Ji-young of Kyobo Securities said, "We believe the worst period has passed," adding, "Since sales of the main product, home appliance filters, are continuously growing, a recovery in performance is expected next year, and the decision to repurchase treasury shares could have a positive effect on the stock price."

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