[Click eStock] "Kumho Petrochemical, Q1 Results Exceed Expectations... Industry Recovery Phase"

Shinhan Investment Corp. evaluated Kumho Petrochemical on the 8th, stating that it delivered better-than-expected results in the first quarter and is in a recovery phase of the industry. The investment opinion was maintained as 'Buy' with a target price of 190,000 KRW.

Researcher Jinmyung Lee said, "Due to the prolonged downturn in the industry, the trend of earnings decline continued until the fourth quarter of last year. However, the turnaround began in the first quarter, and the company, as a global top-tier synthetic rubber manufacturer in the recovery phase of the market, is expected to maintain differentiated performance and stock price momentum."

Lee noted, "The operating profit in the first quarter was 78.6 billion KRW, a 115% increase from the previous quarter, surpassing the consensus of 67.3 billion KRW. This was attributed to the disappearance of one-off factors from the previous quarter and improvements in the robust rubber business and the previously weak synthetic resin and phenol derivatives sectors."

He also forecasted, "Operating profit in the second quarter is expected to continue improving, increasing by 9% from the previous quarter to 85.3 billion KRW. Synthetic rubber is anticipated to see a 16% profit increase due to rising prices of general-purpose rubber and recovery of NB latex spreads."

He added, "EPDM will maintain solid profitability with increased sales volume and spread recovery. Phenol derivatives are expected to return to profitability due to the recovery of epoxy spreads, while synthetic resin is projected to continue operating at a loss."

Researcher Lee concluded, "Considering that the industry is at the early stage of recovery and the demand for synthetic rubber centered on China is expected, the current stock price (price-to-book ratio (PBR) of 0.7) indicates valid upside potential."

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