Hyosung Chemical, CAPA Has Changed

[Asia Economy Reporter Park Soyeon] Heungkuk Securities has set a target price of 400,000 KRW and a buy rating for Hyosung Chemical.

According to FN Guide on the 27th, Heungkuk Securities stated in a recent report, "Hyosung Chemical, a front-end specialty chemical company, is expected to show remarkable growth in 2022."

Hyosung Chemical is a front-end specialty chemical company producing and selling TPA, a general-purpose premium polypropylene chemical fiber made from propane, and NF3, a special gas used in semiconductor display etching processes. It holds the number one market share in the special PP market for construction pipes.

In the third quarter, Hyosung Chemical recorded sales of 630.6 billion KRW and an operating profit of 32.9 billion KRW. The operating profit showed an earnings shock, falling 48% short of the consensus (63.3 billion KRW) due to one-time costs (about 7 billion KRW) from a fire at the Ulsan plant and expanded losses at the Vietnam subsidiary caused by the resurgence of COVID-19 in Southeast Asia. Cost burdens and one-time expenses were the reasons for the poor performance.

With the completion of the 1.4 trillion KRW scale expansion of the Vietnam PP/DH plant in the second quarter of this year, sales from this expansion are expected to be reflected in 2022. Due to steady demand from front-end industries such as semiconductors and displays, NF3 production capacity is also planned to increase from the existing 4,800 tons to 6,800 tons by the third quarter of 2022.

Choi Jong-kyung, head of the research team at Heungkuk Life Insurance, said, "Hyosung Chemical's performance and profitability are expected to grow significantly next year."