[Click eStock] "TKG Huchems, Cost Reduction Expected in First Half of This Year"

Yuanta Securities analyzed on the 5th that TKG Huchems is expected to reduce costs due to the decline in ammonia prices in the first half of this year. They maintained a 'Buy' investment rating and a target price of 31,000 KRW.

Researcher Hwang Kyuwon of Yuanta Securities estimated that TKG Huchems will achieve sales of 934.7 billion KRW and an operating profit of 127.4 billion KRW this year. The operating profit represents a 5% increase compared to 121.2 billion KRW last year.

Researcher Hwang anticipated that cost reduction will be possible in the first half of this year due to the drop in ammonia prices, which is a raw material purchased by TKG Huchems. He explained, "Thanks to the warm winter last year, there was an oversupply of natural gas," adding, "Since ammonia is produced by synthesizing nitrogen with natural gas, the decline in natural gas prices leads to a sharp drop in ammonia prices."

He continued, "There is momentum for a 300,000-ton expansion of mononitrobenzene (MNB) scheduled for the second half of this year," and "Investment in the localization of phenylene diamine (PDA), a raw material for aramid, is also under consideration." He expressed expectations that "if the investment is realized, it could increase the corporate value by an additional 20%."