[Click eStock] "Kumho Petrochemical, Earnings Recovery Starting Q1 This Year... Target Price Down"

Target Price Lowered from 180,000 KRW to 130,000 KRW

On the 20th, SK Securities downgraded Kumho Petrochemical's target stock price from 180,000 KRW to 130,000 KRW, anticipating a recovery in performance starting from the first quarter of this year. The investment rating was maintained at 'Buy.'

Kim Dohyun, a researcher at SK Securities, stated, "While it is necessary to lower expectations due to poor performance in the fourth quarter of last year, the robust market conditions are expected to continue. Although the target price was adjusted downward reflecting the lowered earnings estimates, the stock price is currently at a bottom level amid expectations that performance recovery will continue this year, with 2024 as the trough."

Kumho Petrochemical's fourth-quarter results last year are expected to have fallen short of market forecasts. Researcher Kim said, "Fourth-quarter sales are estimated to have increased by 14.1% year-on-year to 1.7 trillion KRW, and operating profit is expected to have risen by 0.7% to 36.9 billion KRW, falling short of the consensus (average securities firm forecast). This is likely due to the reflection of one-time year-end expenses, regular maintenance, and a decrease in sales volume entering the off-season, resulting in poor performance."

Performance is expected to recover from the first quarter of this year. Researcher Kim predicted, "Operating profit in the first quarter is expected to record a significant improvement, increasing by 100.8% from the previous quarter to 74.2 billion KRW. The decline in raw material prices that occurred in the fourth quarter of last year is stabilizing, and the synthetic rubber spread is expected to improve in the first quarter. Additionally, the reduction of one-time factors that occurred at year-end and the continuation of a favorable exchange rate will contribute to improved performance."

This year, robust market conditions are expected to continue. Researcher Kim said, "With ongoing improvements in demand factors such as China's strengthened economic stimulus measures, and limited capacity expansions expected to continue, a stable supply-demand balance can be maintained. Furthermore, the still-strong natural rubber prices are acting as a factor limiting the downside of synthetic rubber prices."

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