Up 70% This Year... Which Stock Smiled Alone in the Crash?

[Asia Economy Reporter Kwon Jaehee] Amid recent concerns over a global economic downturn and a rising interest rate trend causing the stock market to decline, one stock has stood out with strong performance. That stock is OCI, related to solar energy. Previously, related stocks gained attention as Europe's transition to eco-friendly energy accelerated due to the Russia-Ukraine conflict, but OCI differentiates itself by possessing the entire value chain of the solar industry. As a result, the securities industry regards OCI as the top preferred stock in the solar energy sector.

According to the Korea Exchange on the 3rd, OCI has risen 70% so far this year. The closing price on the most recent trading day, July 1, was 143,000 KRW, representing a 70.04% increase compared to the lowest point of 84,100 KRW on January 28. While the KOSPI fell 13% over the past month, OCI showed a rise of over 30% during the same period.

OCI's ability to rise alone even in a market crash is due to the solar boom combined with the U.S. import ban on products and raw materials from China's Xinjiang Uygur region.

The installation capacity of solar power is steadily increasing. Due to global carbon neutrality policies promoting eco-friendly renewable energy transition and high oil prices highlighting the economic feasibility of solar power, solar installations this year are expected to increase by more than 30% compared to the previous year, reaching 245 GWh.

In this strong demand environment, the supply of newly expanded Chinese polysilicon has been less than expected, causing a supply-demand imbalance and sustaining strong polysilicon prices. The price of polysilicon, the main raw material for solar panels, currently stands at $33.1 per kilogram, a 560% surge compared to May last year. The industry expects the supply-demand imbalance to continue until 2023 when polysilicon expansion volumes are stably supplied to the market.

Moreover, with the U.S. fully enforcing the import ban on products and raw materials produced in China's Xinjiang Uygur Autonomous Region, OCI has benefited as a result. This is because 40% of the world's polysilicon is produced in Xinjiang. Consequently, OCI, which has established the entire value chain related to solar energy, has attracted attention. Unlike other solar-related stocks, OCI succeeded in commercial polysilicon production in 2008 and is recognized as the only domestic company producing polysilicon in Korea.

Lee Sangheon, a researcher at Hi Investment & Securities, analyzed, "With the continued strong trend in polysilicon prices, OCI is expected to accelerate its performance turnaround in the second half of the year as the effects of capacity expansion fully materialize."

Kang Dongjin, a researcher at Hyundai Motor Securities, also said, "Although second-quarter earnings are expected to fall short of market forecasts due to one-time equipment troubles and the Cargo Solidarity strike effects, earnings are expected to be revised upward in the second half reflecting the tight polysilicon market outlook. OCI will benefit from U.S. polysilicon demand due to the enforcement of the China Xinjiang Uygur forced labor law."

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