[Click eStock] "DL, 3Q Operating Profit Expected to Increase 1200%... Target Price Maintained"

[Asia Economy Reporter Myunghwan Lee] Kiwoom Securities announced on the 10th that it maintains a buy rating and a target price of 100,000 KRW for DL. This is because the company is expected to record operating profits exceeding market expectations in the second and third quarters of this year.

Kiwoom Securities forecasted that DL's operating profit for the second quarter of this year will be 800 million KRW, a 92.3% decrease compared to the previous quarter. This is attributed to the acquisition costs of the US global chemical company Kraton. Excluding these related costs, the actual operating profit is analyzed to increase by 252.6% compared to the previous quarter, reaching 113.8 billion KRW. The increase in actual operating profit is explained by improved performance across all business divisions.

It is expected that the operating profit of DL Chemical, a subsidiary, will increase by 583.6% compared to the previous quarter, reaching 18.5 billion KRW in the first quarter. This is due to the favorable lubricants market, with the main product polybutene (PB) maintaining high profitability. The operating profit of Cariflex is expected to record 13.6 billion KRW, a 21.2% increase from the previous quarter, driven by increased demand for medical products.

Kraton's operating loss is expected to widen to 37.5 billion KRW compared to the previous quarter. However, considering one-time costs, the actual operating profit is analyzed to exceed 75 billion KRW. DL FNC's operating profit is expected to increase by 14.6% compared to the previous quarter, reaching 2.4 billion KRW.

Kiwoom Securities forecasts that DL's operating profit for the third quarter of this year will increase by 1258.6% compared to the previous quarter, reaching 135.9 billion KRW. Researcher Dongwook Lee of Kiwoom Securities explained, "With the decline in naphtha and LPG prices, cost reductions are expected in chemical businesses, and the overall performance of chemical products is expected to improve due to the lifting of lockdowns in China. Additionally, as Kraton's performance is fully reflected and the major PB company TPC in the US has filed for bankruptcy, a positive spillover effect on PB exports to the US is anticipated."