[Click eStock] KCC, Fundamental Improvement... Target Price Raised to 400,000 Won+

On the 7th, Kiwoom Securities raised the target price for KCC to 400,000 KRW, reflecting improved fundamentals. The investment rating was maintained as 'Buy.'

Jeong Kyung-hee, a researcher at Kiwoom Securities, stated in a report on the same day, "With the securitization of held assets expected to proceed in the second half of the year, we anticipate a reduction in acquisition financing interest rates by around 8%, leading to approximately 100 billion KRW in interest expense savings in non-operating income, which will significantly improve overall net profit." She added, "Reflecting the improved fundamentals, we have raised the target price and maintain our top pick rating in the chemical sector."

Kiwoom Securities announced a first-quarter revenue of approximately 1.59 trillion KRW and an operating profit of 106.7 billion KRW, surpassing Kiwoom Securities' operating profit estimate (81.5 billion KRW) by 30.9% and the market consensus (76.7 billion KRW) by 39.1%, marking an earnings surprise.

Researcher Jeong Kyung-hee analyzed, "The first quarter is typically an off-season for the building materials and coatings sectors. However, the sustained strong margins in coatings, continued weakness in PVC?the main raw material for the building materials sector?and an increased proportion of high-margin overseas coatings sales appear to have improved profitability."

She also forecasted that the corporate value would rise this year thanks to the silicone segment. Jeong Kyung-hee said, "Due to the characteristics of organic silicone products used across various industries, we expect the downturn to continue in 2024 in line with the macroeconomic environment. However, based on first-quarter results, profitability in this segment is estimated to have significantly improved due to internal efficiency enhancements."

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