[Click eStock] Hanwha Solutions, a Festival of PVC, Caustic Soda, and EVA

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities announced on the 29th that it maintains a buy rating and a target price of 60,000 KRW for Hanwha Solutions.

Hanwha Solutions' operating profit for the third quarter of this year was 178.4 billion KRW, meeting market expectations. Researcher Dongwook Lee of Kiwoom Securities explained, "Despite the widening losses in the solar power division, the reason for maintaining solid performance compared to other competitors is due to the strong results in the chemical division."

PVC saw increased inventory replenishment intentions from buyers in India, a major export region, ahead of the peak season. Prices and spreads remained strong due to the competitive disadvantage of the carbide process caused by China's power shortage and rising coal prices. Caustic soda prices remained strong due to tight supply caused by the impact of hurricanes in the U.S. and regular maintenance of regional companies, and EVA maintained high profitability due to tight supply of other grade products caused by increased solar power demand.

Researcher Lee stated, "There is a need to assign more value to Hanwha Solutions' hydrogen and CNG high-pressure tank business." Hanwha Cimarron, acquired at the end of last year, signed a supply contract for compressed natural gas storage tanks and is making a full-scale entry into the U.S. transportation high-pressure tank market. Hanwha Cimarron signed a contract with U.S. Sunbridge to supply CNG tube trailers worth about 300 billion KRW. It appears that 18 of Hanwha Cimarron's Jupiter Type 4 tanks are included in each tube trailer. Hanwha Solutions plans to invest about 60 billion KRW to build a high-pressure tank production facility in Alabama, USA, simultaneously with this contract. Once the factory is completed in the second half of next year, it will be able to produce 4,000 high-pressure tanks annually. Additionally, further investments are planned to enter the markets for hydrogen vehicles, UAM, and space rockets.

Meanwhile, PVC prices are soaring. Domestic PVC prices are formed at 1,700 USD per ton, more than 60% higher than the same period last year. This is due to a reduction in the operating rate of the competitive electrolysis method caused by the sharp rise in coal and carbide prices, along with supply tightness caused by production disruptions among producers in the U.S. and Europe. Both domestic and international PVC prices are expected to rise further over the next 3 to 4 months due to supply shortages, increased electricity and logistics costs, and rising demand in Europe, the U.S., and India. For reference, PVC prices in Europe, the U.S., and India are trading at a 30-40% premium compared to domestic prices.