[Click eStock] "Lotte Chemical, Industry Outlook Dim... Target Price ↓"

NH Investment & Securities evaluated on the 2nd that there are still no signals of industry improvement, which is a prerequisite for a stock price rebound, for Lotte Chemical. Accordingly, it maintained the investment rating at 'Hold' and lowered the target price by 24% to 65,000 KRW.

Choi Young-kwang, a researcher at NH Investment & Securities, stated, "The condition for improved visibility of industry recovery is judged to be a sharp decline in oil prices or a steep improvement in supply and demand (capacity utilization recovery), but the possibility of realization in the short term is low."

Researcher Choi explained, "The decline in oil prices (naphtha price) in 2025 is expected to be gradual rather than steep," adding, "Considering the product supply and demand situation, a gradual decline in raw material prices is unlikely to lead to an improvement in spreads."

He also analyzed, "While the global facility utilization rate remains significantly lower than the historical average, the scale of new expansions from 2025 to 2027 is large, so it is expected to take a long time to resolve the accumulated oversupply."

Meanwhile, NH Investment & Securities forecasted that Lotte Chemical's fourth-quarter sales will decrease by 3.6% quarter-on-quarter to 5 trillion KRW, with an operating loss of 205 billion KRW, continuing the deficit.

Researcher Choi diagnosed, "The deficit is expected to narrow compared to the previous quarter due to the elimination of opportunity losses of about 90 billion KRW from LC USA facility maintenance that occurred in the third quarter and inventory valuation losses of 16 billion KRW," but added, "The poor spreads across chemical products continue, and the industry downturn remains unchanged."

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