[Click eStock] "Aseajeji, Corrugated Paper Industry Boom... Target Price 80,000 Won"

[Asia Economy Reporter Hyunseok Yoo] KTB Investment & Securities analyzed on the 22nd that Asia Paper stands out for its long-term vertical integration amid the booming corrugated board industry. They newly issued a 'Strong Buy' investment opinion with a target price of 80,000 KRW.

Asia Paper is a specialized manufacturer of corrugated base paper established in 1958. Originally founded as Samyang Paper Industry, it was acquired by Asia Cement Industry in 1985 and changed its name to the current Asia Paper. It was listed on the KOSPI market in 1988.

Kim Young-jun, a researcher at KTB Investment & Securities, said, "Amid the corrugated board industry boom, this is a time when long-term vertical integration is highlighted," adding, "In this cyclical industry where raw material prices are most important, vertical integration and oligopolization have increased pricing power." He further stated, "During the raw material price increase phase, the company is improving its structure by surpassing the 2018 profits."

He explained, "Even after recording the highest-ever performance this year, continuous external growth is expected. Based on stable raw material supply, the pricing negotiation power of the board company is increasing," and added, "It is expected that the board company will lead external growth by complementing the capacity expansion limits of the base paper company while improving the spread of the board company."

KTB Investment & Securities forecasted that Asia Paper's sales and operating profit next year will reach 994.8 billion KRW and 145.4 billion KRW, respectively, representing increases of 7% and 29% compared to the previous year. He said, "Growth is expected to continue following 2021," and added, "After raw material prices sharply rose for over a year, a slow downward stabilization is expected, with a turnaround beginning from the fourth quarter of this year." He also added, "Based on the ability to pass on price increases, a solid spread will be maintained, and record-high performance is expected in 2022."