[Click eStock] "Kumho Petrochemical, Earnings Improvement Expected Due to Strong Natural Rubber... Target Price Up"

Hana Securities forecasted on the 19th that Kumho Petrochemical will see performance improvement due to the strength of natural rubber. They maintained a 'Buy' investment rating and raised the target price from 180,000 KRW to 190,000 KRW.

Researcher Yoon Jaesung of Hana Securities said, "We expect the operating profit for the second quarter to exceed market expectations by about 30%," adding, "Thanks to performance improvements across all business divisions." He continued, "The operating profit from synthetic rubber will be a key factor in the company's overall performance improvement," and explained, "In particular, Solution Styrene Butadiene Rubber (SSBR) is showing higher profits compared to general-purpose rubber due to strong demand for electric vehicle tires."

Researcher Yoon projected a mid- to long-term strength in natural rubber. He noted, "Natural rubber production has sharply declined in major producing countries over the past few years due to low profitability and pest damage," and pointed out, "With the European Union Deforestation Regulation (EUDR) coming into effect from 2025, many smallholder farmers affected by profitability may abandon cultivation." He analyzed, "The strength of natural rubber will ultimately be a factor causing price increases across the synthetic rubber supply chain."

Furthermore, he said, "A sharp increase in synthetic rubber imports is expected due to the popularization of automobiles in India," and added, "Korea maintains a leading position in India's import share." He also mentioned, "Synthetic rubber companies can be classified as direct beneficiaries of the expanding demand in India, and mid- to long-term valuation based on India's growth is also applicable."