[Asia Economy Reporter Park Soyeon] Samsung Securities has downgraded the target price of Lotte Chemical from 310,000 KRW to 290,000 KRW regarding its Q4 2021 earnings, citing "inevitable impact from demand contraction." The investment rating remains a buy.
According to FN Guide on the 9th, Samsung Securities stated in a recent report, "Operating profit for Q4 is expected to significantly miss consensus at 149.8 billion KRW," adding, "The poor performance is due to opportunity losses from scheduled maintenance and weak market conditions."
Researcher Cho Hyun-ryeol of Samsung Securities explained, "The worse-than-expected results are attributed to the continued weak market conditions for olefin products and opportunity losses caused by scheduled maintenance."
Researcher Cho said, "Ahead of China's Lunar New Year and the Winter Olympics, regional lockdowns continue to prevent the spread of COVID-19," adding, "China's zero-COVID policy causes a contraction in consumer sentiment, which negatively affects chemical demand," and "If policy changes occur in China after the Winter Olympics, there could be momentum for recovery from a demand perspective."
He added, "Due to the downward revision of the 2022 return on equity (ROE) forecast, the target price is also slightly lowered (from 310,000 KRW to 290,000 KRW)," and said, "With valuation expectations lowered, investment sentiment could quickly improve if a spread rebound occurs," maintaining a 'buy' rating.
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