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[Alpha Biz= Reporter Kim Minyoung] Shinhan Financial Investment Maintains "Buy" Rating and 200,000 Won Target Price for Kumho Petrochemical
On August 5th, Shinhan Financial Investment upheld its "Buy" rating and 200,000 won target price for Kumho Petrochemical, citing expected profitability improvements in the latter half of the year.
Shinhan Financial Investment noted that Kumho Petrochemical reported an operating profit of 119.1 billion won for the second quarter, marking a 52% increase from the previous quarter and surpassing the consensus estimate of 91.6 billion won. The increase was driven primarily by a substantial 86% rise in synthetic rubber profits, which reached 46.6 billion won.
The firm highlighted that robust demand led to a 11% increase in the price of Styrene-Butadiene Rubber (SBR) and a turnaround to profitability for NB latex, driven by a 20% increase in sales volume and a 15% rise in selling prices. Meanwhile, EPDM (high-value rubber) maintained solid demand, contributing 22.4 billion won, though this was a 3% decrease from the previous quarter.
Looking ahead, Shinhan Financial Investment expects operating profit for the third quarter to reach 116.2 billion won, surpassing market expectations. The firm anticipates that despite a slowdown in SBR spread due to rising raw material costs, increased sales volume of NB latex, driven by recovering demand, will lead to a 9% increase in profitability compared to the previous quarter.
Alphabiz Kim Minyoung (kimmy@alphabiz.co.kr)
