Kiwoom Securities predicted that Hyosung Chemical's performance in the second half of this year is expected to fall below market expectations due to rising LPG prices and some shutdowns.
However, it was evaluated that flexible performance improvement is expected to be achieved at the low point in the 3rd quarter due to full-scale operation of Vietnam's expansion and improved demand due to improved penetration rate of vaccines.
As a result, the investment opinion "Buy" and the target price remained at 570,000 won.
Currently, Hyosung Chemical's stock price is 419,500 won based on the closing price on the 16th. Kiwoom Securities predicted that Hyosung Chemical's second-half earnings will be below expectations.
"We initially predicted LPG prices to fall in the third quarter, but the price of LPG input has risen due to rising gas and oil prices," Kiwoom Securities said. "Some opportunity costs are expected to arise due to early regular repairs caused by domestic PDH plant fires.".
"The utilization rate of customers is also expected to decline due to the spread of Vietnam's COVID-19," Kiwoom Securities added. "This is because LPG prices are expected to rebound further due to increased demand for heating in the fourth quarter.".
However, it is expected that flexible performance improvement will continue from next year to next year. "With the completion of the Kefax of the Vietnamese project, which cost about KRW 1.5 trillion, a move to strengthen competitiveness (such as expansion and replacement of old facilities) in the non- PP-DH sector, which had limited investment, is expected to take place in earnest," Kiwoom Securities said.
Considering the current export prices and the drainage of rival gas companies, the operating value of NF3 will increase to about 600 billion won after the expansion.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
