[Click eStock] "Gukdo Chemical Rides India's Growth... Target Price Up"

Hana Securities raised the target price of ‘Gukdo Chemical,’ which primarily produces epoxy resin, to 50,000 KRW on the 20th. They forecast that the profitability of global operations in countries such as China and India is significantly improving, and in the long term, it will become a direct beneficiary of India’s economic growth.

National Road Chemical Plant Building

On the same day, Hana Securities raised Gukdo Chemical’s Q2 operating profit forecast to 10.3 billion KRW. This represents a 491% increase compared to the previous quarter (Q1) operating profit and exceeds the market consensus average by 232%. They estimated that in the second half of this year, operating profit will reach 28.4 billion KRW, a 137% increase compared to the first half.

Yoon Jae-sung, an analyst at Hana Securities, explained, "In the cases of China and India operations, the decline in losses was due to the halt in epoxy price drops and an increase in operating rates." He added, "Especially in India, the deficit is rapidly shrinking as they fill the supply gap caused by competitors’ raw material (BPA) procurement issues."

He also anticipated that the rise in epoxy prices would lead to improved profitability. Analyst Yoon stated, "In the US and Europe, which account for more than 45% of the total sales volume of the domestic headquarters, epoxy selling prices were raised by $132 per ton starting in June." He analyzed, "In China, domestic prices have slightly rebounded since May due to the effects of real estate market stimulus measures." He further observed, "As the external outflow of Chinese-made products decreases, selling prices in Asian regions including India are expected to rise overall."

In the long term, he predicted that Gukdo Chemical will be a direct beneficiary of India’s economic growth. He emphasized, "Gukdo Chemical’s market share in India’s epoxy market is around 20-30%, with plans to more than double capacity next year." He added, "Given the ongoing housing and infrastructure construction boom in India, which is likely to continue for the next 2-3 years, explosive growth in the epoxy market will follow."