[Special Stock] JC Chemical, Structural Growth as a Core Carbon Neutrality Company... Surge in CPO Prices

[Asia Economy Reporter Hyungsoo Park] JC Chemical is showing strong performance. The expectation of benefits from the strengthening of carbon neutrality policies appears to be influencing the stock price.

As of 1:33 PM on the 13th, JC Chemical is trading at 11,500 KRW, up 7.98% from the previous day.

JC Chemical, established in 2006, is a company that manufactures and sells biofuels such as biodiesel and bio-heavy oil, which are renewable energy sources. It also operates a palm plantation business producing palm oil, one of the main raw materials for biodiesel.

Researcher Choi Jae-ho from Hana Financial Investment explained, "Biodiesel raw materials include waste cooking oil and palm oil derived from refining CPO (Crude Palm Oil)," and "bio-heavy oil raw materials include pitch (by-products) generated during the distillation process of biodiesel production."

He added, "CPO plays an important role in producing biofuels," and explained, "The continued strength in CPO prices, which are passed on through selling prices, will drive JC Chemical's earnings growth."

Researcher Choi also noted, "The average CPO price last year was $710 per ton, but this year it has surpassed $1,000 per ton."

Furthermore, he emphasized, "Considering the government's policy-driven increase in the blending and mandatory ratios of biofuels, inflationary pressures, and the rise in biodiesel demand as economic activities resume, the upward trend in CPO prices is expected to continue."

He introduced, "According to the government's ‘2050 Carbon Neutrality’ promotion strategy, the proportion of renewable energy power generation is expanding, and the Renewable Fuel Standard (RFS) blending obligation rate has been raised from the existing 3% to 3.5% in July this year."

Researcher Choi said, "Biodiesel demand will increase by about 17% starting from the third quarter," and "in the case of bio-heavy oil, the Renewable Portfolio Standard (RPS) has been raised from the existing 7% to 9% this year."

He analyzed, "As the upper limit of the mandatory blending ratio expands from the current 10% to 25% by 2023, bio-heavy oil demand will surge year by year," and "an environment is being created where biofuel companies are structurally bound to grow."

It is estimated that JC Chemical will achieve sales of 328.9 billion KRW and an operating profit of 36.5 billion KRW this year, representing increases of 22.9% and 90.3%, respectively, compared to last year.