[Click eStock] "Lotte Jeongmil Hwachem Supplies 1 Trillion to Colorcon... Performance Improvement Trend"

IBK Investment & Securities forecasted on the 8th that Lotte Fine Chemical will continue its performance improvement trend from the third quarter onwards. This outlook is based on the long-term supply contract for medical cellulose signed with a global company, as well as the expected improvement in the supply and demand of key products such as glycerin.

Lee Dong-wook, an analyst at IBK Investment & Securities, stated, "Lotte Fine Chemical is expected to achieve an operating profit of 18.3 billion KRW in the third quarter, a 7.1% increase compared to the previous quarter," adding, "Despite the profitability improvement, the results fall short of market expectations."

The analyst explained, "A decline in the exchange rate (strengthening of the Korean won) created an unfavorable environment for exports, logistics costs increased due to supply chain disruptions, and increased supply volume from new expansions by Chinese competitors all acted as negative factors for profitability," further noting, "Since July, ammonia prices have also fallen, slowing top-line growth."

He added, "However, profit growth is expected in the core green materials business in the third quarter," and predicted, "The operating rate of the Hecellos Plant, which was expanded last quarter, is improving, and profitability will improve thanks to increased volumes in the Anicot and food and pharmaceutical sectors."

He also said, "Lotte Fine Chemical signed a distribution contract worth 1 trillion KRW with Colorcon, the world's number one pharmaceutical cellulose distributor," and forecasted, "Through this, the company will have exclusive sales rights in the global pharmaceutical market for 10 years." He anticipated, "In the second half of next year, an investment of 79 billion KRW will be made to expand the food and pharmaceutical production line by 6,000 tons, which will increase sales volume."

He continued, "Regarding glycerin, whose demand increases at the end of the year, prices have been rebounding since the third quarter," and added, "The unplanned shutdown of a 130,000-ton Chinese plant will also positively impact Lotte Fine Chemical's profitability."

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