[Click eStock] "Lotte Chemical, Expected to Benefit from Alternative Meat Market"

Growth Potential in Hecellos Division
Kiwoom Securities Maintains Lotte Fine Chemical Target Price at 117,000 Won

[Asia Economy Reporter Gong Byung-sun] It has been suggested that Lotte Fine Chemical will grow by leveraging the growth of the alternative meat market. Additionally, growth in the cellulose-based Hecellos division is also an expected factor.

On the 2nd, Kiwoom Securities maintained a 'Buy' investment rating and a target price of 117,000 KRW for Lotte Fine Chemical. The previous day's closing price was 75,800 KRW.

It is expected that benefits related to the alternative meat market will occur. Last year, global alternative protein consumption reached 13 million tons, the highest level ever. However, this accounts for only 2% of the total animal protein food market, and it is expected to grow at an average annual rate of over 17% to 65 million tons by 2030. This is due to increased interest in sustainability in social and environmental sectors such as health, environment, and animal welfare after COVID-19.

Lotte Fine Chemical completed the expansion of 1,900 tons of Anycoat production facilities in the first half of this year, considering growth in the alternative meat market and pharmaceutical coatings. Anycoat is a substance used in pharmaceuticals, food, and plant-based capsule raw materials. Lotte Fine Chemical plans to further increase its food and pharmaceutical production lines by the first half of next year, adding an additional 2,000 tons of production capacity.

They are also investing in the Hecellos division. Hecellos is known as an eco-friendly material raw material used in cement extrusion, paint, detergents, and pharmaceuticals. Recently, they signed a consignment production contract for the third Hecellos plant with Lotte Chemical and plan to build a factory capable of producing 10,000 tons annually on the Lotte Chemical Yeosu plant site.

Lee Dong-wook, a researcher at Kiwoom Securities, said, "Due to exclusive supply contracts, Lotte Fine Chemical's Hecellos sales volume is expected to increase by more than 50%, from the current 19,000 tons to 29,000 tons in the fourth quarter of 2023," and added, "With the performance improvement of Solus Advanced Materials and the continued high profitability of Lotte INEOS Chemical, Lotte Fine Chemical's pre-tax profit in the fourth quarter of this year is expected to exceed operating profit."