[Click eStock] DL, Stronger Amid High Oil Prices

[Asia Economy Reporter Junho Hwang] Hanwha Investment & Securities maintained the target price of DL at 93,000 KRW on the 27th, expecting benefits from high oil prices.

Hanwha Investment & Securities judged that DL's profit resilience has increased in the high oil price environment due to the acquisition of the US chemical listed company Crayton in March. From 2019 to 2021, the average annual sales of DL/Crayton were approximately 2.04 trillion KRW and 2.07 trillion KRW, respectively. If the acquisition of Crayton had been reflected, DL's performance last year is expected to have grown to sales of 4.6 trillion KRW, operating profit of 516.3 billion KRW, and net profit of 505.9 billion KRW.

In particular, since DL's NCC-related DL Chemical, which accounts for about 62% of sales, experiences performance slowdown due to high oil prices, the effect of securing performance through the acquisition of Crayton is expected to be significant. Crayton has a business structure that improves performance with high oil prices, as its raw materials are ethane and pine pulp by-products. After DL's acquisition, Crayton (Chemical) is estimated to account for about 22% of the consolidated sales structure.

Researcher Wooje Jeon of Hanwha Investment & Securities said, "From the third quarter of this year, when all acquisition costs are eliminated, DL's sales capacity is expected to double, and profit capacity to expand more than twice," adding, "As profits grow and stabilize, corporate value should increase accordingly."