[Click eStock] "Kumho Petrochemical, Poor Earnings Expected in Q3 Again... Target Price Down"

Yuanta Securities lowered the target price for Kumho Petrochemical from 155,000 KRW to 150,000 KRW on the 22nd. The investment rating was maintained at 'Hold'.

Kumho Petrochemical recorded sales of 1.6 trillion KRW and an operating profit of 107.9 billion KRW in the second quarter. Operating profit plummeted by 70% compared to the same period last year. In July and August, relatively high-cost raw materials (butadiene) were used in rubber production, while prices for synthetic rubber for tires and NB latex rubber continued to weaken. In the case of NB latex, oversupply is expected as the competitor LG Chem-Petronas's new 240,000-ton facility began mass production in September. For phenol, pressure from new capacity expansions by Chinese competitors is also increasing.

As a result, the expected operating profit for the third quarter is only 83.5 billion KRW, indicating continued poor performance. Hwang Kyuwon, a researcher at Yuanta Securities, said, "It seems that more time is needed for the oversupply of key products (NB latex, phenol) to be resolved," adding, "The oversupply of these two products is expected to continue until 2024, so more time is needed for market conditions to improve."

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