[Asia Economy Reporter Park Jihwan] Heungkuk Securities announced on the 8th that Songwon Industrial is expected to see its Q4 operating profit estimates doubled compared to previous forecasts,
and it is evaluated as the best alternative in the chemical sector. The investment opinion was set to 'Buy' and the target price was raised by 11.8% from 17,000 KRW to 19,000 KRW.
Jeon Wooje, a researcher at Heungkuk Securities, stated, "We are raising the Q4 operating profit estimate from 9 billion KRW to 17.4 billion KRW," adding, "November to December is traditionally an off-season inventory adjustment period for clients with year-end regular maintenance, but this year some of it was conducted during the weak demand in Q2 and Q3, so full operation is expected in Q4."
Songwon Industrial, despite market uncertainties due to the impact of COVID-19, plans to secure supply volume and stockpile safety inventory by expanding operating rates in response to a surge in customer orders. The specialty chemical tin and PVC additives are also recovering along with the global construction market.
Songwon Industrial produces additives for PE, PP, ABS, and PVC, which are currently the best-performing products in the petrochemical market. ABS is operating at 100% capacity in China, supported by demand from home appliances and helmets, while PP and PVC are showing strength amid expectations of a global construction recovery. For PE and PP, sales of disposable products have increased.
Researcher Jeon emphasized, "While petrochemical margins and the stock prices of companies like NCC and ECC have risen by an average of 38%, Songwon Industrial, which supplies additives to these companies, has only increased by 16%."
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