[Click eStock] Kumho Petrochemical, Target Price Raised to 188,000 Won on Potential Increase in Shareholder Returns

Kiwoom Securities announced on the 30th that there is a possibility of increased shareholder returns for Kumho Petrochemical and raised the target stock price to 188,000 KRW. The investment rating was maintained as 'Buy.'

Kumho Petrochemical's Q4 sales amounted to approximately 1.5 trillion KRW, and operating profit was 36.9 billion KRW, significantly below Kiwoom Securities' and consensus estimates.

Jeong Kyung-hee, a researcher at Kiwoom Securities, stated, "This was largely due to synthetic resin and phenol, which had been relatively steady, turning to a loss in Q4, along with one-time expenses and increased fixed costs caused by a decline in operating rates." She added, "Nevertheless, the stock price closed up 8.85% on the 29th." This was analyzed to be due to the government's announced stock market policy aimed at raising the low price-to-book ratio (PBR).

Kiwoom Securities said it maintains Kumho Petrochemical as the top pick within the sector. Researcher Jeong Kyung-hee commented, "In conjunction with government policies, the risk of investment in non-core businesses using the previously abundant cash assets is reduced, and the likelihood of these funds being used for shareholder return policies is expected to increase."

Kumho Petrochemical announced two shareholder return policies in 2021. These set cash dividends at a payout ratio of 20-25% based on separate financial statements, and share buybacks and cancellations at 5-10% of net income on a separate basis.

Operating profit for 2024 is expected to increase by 7% year-on-year to approximately 384 billion KRW. Additionally, regarding synthetic rubber, the recovery in demand for global replacement tires has been delayed for over a year, but with tire wear, the industry recovery is expected to be brought forward over time.

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