Hyosung Chemical, "Focus on Potential of Other Business Division"... Investment Opinion 'Buy' with Lowered Target Price

[Asia Economy Reporter Park Soyeon] Heungkuk Securities maintained a buy rating on Hyosung Chemical but lowered the target price.

According to FN Guide on the 20th, Heungkuk Life Insurance recently stated in a report on Hyosung Chemical, "We maintain a buy rating and lower the target price to 240,000 KRW."

Heungkuk Life Insurance analyzed, "Hyosung Chemical achieved external growth by additionally expanding its PP (polypropylene) DH (dehydrogenation) facility with an annual capacity of 300,000 tons in Vietnam in the third quarter of last year," adding, "Although profitability recovery in the first half was limited due to ongoing cost burdens since the beginning of the year, as of August, the propane price stabilized at $670 per ton, returning to the level of September last year."

They continued, "Spread recovery is limited due to overall weak demand," and mentioned, "Sustained growth of NF3 (nitrogen trifluoride), a high-purity semiconductor cleaning gas, and the visible turnaround to profitability of polycarbonate are expected."

They particularly focused on the potential of the other business division. Researcher Jang Hyunggu of Heungkuk Life Insurance said, "Demand for high-purity semiconductor cleaning agents, currently classified under the other business division, has significantly increased so far, and prices have also risen," adding, "Profitability is continuously improving." An expansion of 2,000 tons within the third quarter will be completed from the current annual capacity of 4,800 tons. Polycarbonate is an independently developed new material, an engineering plastic using carbon monoxide as a raw material. Demand for eco-friendly plastics is expected to expand in the future.

Researcher Jang said, "The growth potential of the other business division is sufficient, and an increase in earnings contribution is expected." He added, "Although cost burdens are being resolved, given the limited spread recovery amid overall weak demand for chemical products, it is necessary to take a long-term perspective."

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