[Click eStock] Lotte Fine Chemical, Positive Outlook on Chemical Price Rebound

[Asia Economy Reporter Junho Hwang] On the 28th, SK Securities maintained the target price of Lotte Fine Chemical at 97,000 KRW. This is based on the expectation that operating profit in the first quarter of this year will exceed market expectations due to the rebound in chemical product prices and a solid demand environment.

SK Securities' estimated sales and operating profit for Lotte Fine Chemical in the first quarter of this year are 619.3 billion KRW and 90.9 billion KRW, respectively. These results surpass the market expectations of 567.1 billion KRW and 84.4 billion KRW.

The rebound in chemical product prices is a positive factor for securing performance. The weak trend in chemicals that continued until early January this year has diminished, showing signs of price recovery. In the case of ECH, the price has risen from around 2,460 USD per ton in early January to over 3,000 USD per ton currently. This appears to be influenced by the adjustment of China's ECH operating rate and a favorable paint market environment. Caustic soda is also in a positive situation due to the strength of aluminum prices.

However, an investment asset valuation loss is expected due to the decline in Solus Advanced Materials' stock price. The market capitalization, which was close to 2.8 trillion KRW at the end of last year, has shrunk to 2 trillion KRW. There is a high possibility of increased volatility due to fluctuations in valuation gains and losses going forward.

Hansem Park, a researcher at SK Securities, stated, "The growth of cellulose supported by chemicals is positive," adding, "With the expansion of cellulose, the fundamental strength of profits is expected to improve, so the investment opinion remains a buy."