[Asia Economy Reporter Hyunseok Yoo] TK Chemical is showing strong performance. The stock price appears to be influenced by growing expectations of improved earnings and increased attention to the value of its subsidiary shareholdings.
As of 9:52 AM on the 3rd, TK Chemical was trading at 7,370 KRW, up 10.99% (730 KRW) compared to the previous trading day.
Hyunryul Cho, a researcher at Samsung Securities, stated, "From this year, the profitability of the chemical division is expected to improve, and the sharp increase in earnings of the shipping subsidiaries will lead to a rapid recovery of fundamentals."
The value of shares held by TK Chemical in SM Group's shipping affiliates, SM Shipping and Daehan Shipping, is similar in scale to its market capitalization. TK Chemical holds 29.6% and 25.3% stakes in these companies, respectively.
SM Shipping, benefiting from the shipping industry boom, plans to go public in the second half of the year. As earnings improvements become apparent, the IPO planned by SM Shipping has received a green light. SM Shipping forecasts annual operating profits of approximately 300 billion to 400 billion KRW. The company estimates its valuation to be at least 2.5 trillion KRW. The value of TK Chemical's shareholding could exceed 700 billion KRW.
Researcher Cho said, "Assuming a conservative corporate valuation of SM Shipping between 1 trillion and 1.5 trillion KRW, TK Chemical's share value is estimated to be between 296 billion and 444 billion KRW. Considering the current value of Daehan Shipping shares held (187.2 billion KRW), the value of the shipping subsidiaries alone is expected to range from 483 billion to 631 billion KRW, surpassing the current market capitalization (420.8 billion KRW)."
TK Chemical's chemical division is evaluated to have started profitability improvements as the polyester and spandex spreads rapidly recover. Researcher Cho added, "The decline in operating profit margins caused by losses in polyester filament and spandex will sharply improve from this year."
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