Kiwoom Securities maintained the target price of 440,000 won for Korea Petro Chemical Ind Co Ltd and its investment opinion of 'Buy', respectively.
"Korea Petro Chemical Ind Co Ltd will improve its operating profit in the second quarter," the securities firm said. "The profitability of basic oil and monomer products has been improving recently while maintaining high profitability in the polymer sector such as polypropylene (PP) and high-density polyethylene (HDPE).".
The securities firm added, "The profitability of BTX (Benzene, toluene, and xylene), by-products of steam crackers, has been improved significantly due to the recent rebound in gasoline and polyester industries.".
In the second quarter, BTX (benzen, toluene, and xylene) spreads (profitability indicators excluding raw material prices from sales prices) rose 44.2% from the first quarter.
Korea Petro Chemical Ind Co Ltd has a production capacity of 290,000 tons of BTX, all of which are sold externally. Benefits from improved profitability of ethylene products were also expected.
"Even if domestic customers are limited, the company can sell more than 200,000 tons of ethylene products per year," the securities firm said. "The company's earnings will be significantly impacted by the change in the profitability of ethlyne compared to other domestic NCC companies."
The company is expected to earn 2.3444 trillion won in consolidated sales and 350.6 billion won in operating profit in 2021. Sales are up 24.5% and operating profit is up 106% from 2020.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
