[Click eStock] "Korea Petroleum Contributes to Eco-Friendly Recycle Revenue"

[Asia Economy Reporter Lee Jung-yoon] Heungkuk Securities maintained a buy rating and a target price of 20,000 KRW for Hankook Petrochemical on the 14th, stating that profit contribution was confirmed due to the completion of the recycling organic solvent regeneration distillation tower and the start of commercial production.

Hankook Petrochemical is a specialized company in the manufacturing and distribution of petrochemical products such as industrial asphalt and synthetic resins. Its sales in the third quarter of this year amounted to 173.2 billion KRW, a 17% increase compared to the same period last year, and operating profit was 4.3 billion KRW, a 101% increase. Sales in the asphalt sector for the third quarter rose 38.3% to 87.9 billion KRW, and synthetic resin sales increased 13.1% to 35.7 billion KRW. The chemical segment recorded a slight decrease of 0.7% to 55.5 billion KRW.

Choi Jong-kyung, a researcher at Heungkuk Securities, explained, "The unfavorable effects of global geopolitical instability and inflation-driven crude oil price increases, along with reduced demand, continued, and it was a typical off-season compounded by fewer business days and seasonal demand decline. Nevertheless, maintaining solid profitability is noteworthy. Compared to the same period last year, operating profit doubled, and despite similar operating profit compared to the previous quarter, the profit margin increased by 0.5 percentage points, which is positive."

Researcher Choi also said, "The recycling organic solvent regeneration distillation tower was completed in the first quarter of this year, and commercial production began at the end of June. Profit contribution was confirmed through the third-quarter performance. New product launches in the synthetic resin division, the railway track system business, and the second expansion of recycling are progressing smoothly in each sector."

He added, "International crude oil prices, which reached a peak this year, have stabilized. Referring to the past when Hankook Petrochemical’s profitability peaked during periods of stable international oil prices, it is reasonable to expect future profitability expansion."