[Click eStock] "'Quarterly Record Earnings' Kumho Petrochemical... Winds of Change"… Target Price 600,000 Won

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 6th that it has raised the target price for Kumho Petrochemical to 600,000 KRW, citing that the company's Q1 earnings this year recorded the highest quarterly performance and that shareholder-friendly changes are expected following the resignation of Chairman Park Chan-gu as CEO.

Kumho Petrochemical's operating profit for Q1 this year was 612.5 billion KRW, a 360% increase compared to the same period last year, surpassing market expectations (445.3 billion KRW) by 38%. With significant improvements across all business divisions, the operating profit margins (OPM) for synthetic rubber and Kumho P&B were 38% and 36%, respectively, marking record highs.

Operating profit for Q2 this year is expected to improve by 22% year-on-year to 745.3 billion KRW. This is due to further price improvements of key products, enabling additional performance gains across all divisions.

Operating profits for this year and next are expected to exceed market forecasts by 20%, and based on this, the calculated target price is 600,000 KRW. Researcher Yoon Jae-sung of Hana Financial Investment stated, "The target price of 600,000 KRW corresponds to only 9 times the price-to-earnings ratio (PER) based on this year's earnings, which is a conservative discount compared to the global third-ranked Taiwanese Nantex's PER of 13 times.

Considering that Kumho Petrochemical's rubber production capacity is only 20% of Nantex's and that Kumho's sales are only 10% due to the absence of other businesses such as phenol, while Nantex's market capitalization approaches 3 trillion KRW, Kumho Petrochemical's market cap can sufficiently reach 18 trillion KRW," he forecasted.

The resignation of Chairman Park Chan-gu as CEO on the 4th is also expected to be positive for the company's shareholders. Researcher Yoon explained, "Through the chairman's resignation as CEO, the company has hinted at many possibilities for change," adding, "Many options are open to enhance corporate value, including governance changes, new business opportunities such as CNT based on large net cash, additional dividend increases, and treasury stock cancellations."