[Special Stock] Taekyung Chemical Rises 7% on 'Earnings Expectations'

[Asia Economy Reporter Lee Seon-ae] Taekyung Chemical is showing strong performance on the 26th.

As of 9:46 AM today, Taekyung Chemical is trading at 20,250 KRW, up 6.58% from the previous trading day. In the early session, it surged more than 7% to reach 20,400 KRW.

There are positive earnings forecasts for Taekyung Chemical, which has been spotlighted as a heatwave-related stock. Previously, Hanwha Investment & Securities projected a significant improvement in Taekyung Chemical’s earnings.

Taekyung Chemical is the leading carbon dioxide supplier in Korea. Its main business segments include the "Carbon Dioxide Division," which manufactures high-purity liquid carbon dioxide and dry ice (D/I) using carbon dioxide generated from petrochemical plants and refineries, and the "Environment Division," which produces magnesium hydroxide and other products. In 2020, the sales revenue composition by product was 68% from carbon dioxide products, 21% from general gases, 8% from environmental products, and 3% from others.

The carbon dioxide division saw a sharp increase in profits starting from the first quarter of last year due to improved profitability. This was because the prices of dry ice and liquid carbon dioxide rose while the raw material cost of carbon dioxide declined, expanding the price spread.

Researcher Kim Dong-ha from Hanwha Investment & Securities explained, “The earnings improvement trend in the carbon dioxide division is expected to continue,” adding, “Considering the accelerated growth of the fresh food market after COVID-19, entry into the pharmaceutical cold chain market, differentiated raw materials (hydrogen-based), and the acquisition of the only domestic certifications for food & beverage and medical use, demand for highly profitable dry ice is expected to increase.”

He also added, “Liquid carbon dioxide, which had been stagnant, is gradually resuming growth and will contribute to earnings improvement.” Accordingly, this year’s earnings are forecasted at 54.9 billion KRW in sales (+17%), 13.1 billion KRW in operating profit (+70%), and 12.1 billion KRW in net profit (+56%).

Researcher Kim analyzed, “There is potential for further earnings improvement next year due to new factory expansions and the possibility of price floor rigidity for carbon dioxide products. However, valuation pressure remains a risk factor.”