[Click eStock] TGK Huchems, Overwhelming Dividend Yield This Year

IBK Investment & Securities announced on the 3rd that it maintains a buy rating and a target price of 31,000 KRW for TGK Huchems. Despite the recent rise in stock price, the dividend yield is judged to be overwhelmingly high at 7.3% within the sector.

August, when the first-half earnings of December fiscal year-end companies are announced, is one of the optimal times for dividend stock investment to gauge the annual dividend scale and policy of companies. TGK Huchems' first-half net profit was 85.4 billion KRW, already surpassing last year's full-year figure. Dongwook Lee, a researcher at IBK Investment & Securities, stated, "Even assuming this year's dividend payout ratio is the same as last year's, which was the lowest among the past six years, the dividend per share (DPS) is expected to increase by more than 60% compared to last year," adding, "Considering that most of this year's MNB and nitric acid investments will be completed, it is highly likely that a high dividend payout ratio will be maintained next year as well."

TGK Huchems' operating profit for the second quarter of this year was 43.7 billion KRW, a 41.7% increase compared to the same period last year, exceeding the heightened market expectation of 40.1 billion KRW. Despite a decrease in sales volume due to price reductions, the product spread improved thanks to a decline in major raw material prices.

Meanwhile, with the expansion underway, nitric acid production capacity is expected to increase by 37% to 1.48 million tons by the end of this year compared to the existing capacity. As the absolute volume increases, additional cost savings in fixed costs and utilities are anticipated. Furthermore, the capital expenditure (Capex) for the sixth nitric acid plant this time is 150 billion KRW, which is the same investment amount as the company's fifth plant expansion made 10 years ago.