[Click eStock] "Kumho Petrochemical, Differentiated Profitability Within the Industry... Target Price Maintained"

Second Half Operating Profit Expected to Exceed Market Expectations
Synthetic Rubber and Butadiene Market Remain Strong
NB Latex Industry Improvement Expands

Shinhan Investment Corp. analyzed on the 3rd that Kumho Petrochemical is expected to maintain differentiated profitability within the industry. The investment opinion 'Buy' and the target price of 200,000 KRW were maintained. Kumho Petrochemical's closing price on the previous trading day was 137,500 KRW.

Jinmyung Lee, a researcher at Shinhan Investment Corp., stated, "Based on the strong performance momentum in the first half of this year, differentiated profitability within the industry is expected to continue in the second half. Despite the seasonal off-season and regular maintenance, operating profit in the second half is expected to exceed market expectations."

Currently, the SBR (Styrene-Butadiene Rubber) and BR (Butadiene Rubber) markets are showing strength. In August, the export price of SBR has maintained an upward trend despite the decline in the price of the raw material, butadiene. This is mainly due to the strength of natural rubber substitutes, high operating rates of Chinese tire manufacturers, and limited capacity expansion. Thanks to these factors, the market conditions are expected to remain favorable in the second half.

In the case of NB latex, the export price in August rose by 24% compared to the beginning of the year. Export volume recorded the highest level since May 2021. The increased operating rates of glove manufacturers, the downstream industry, are leading to improved market conditions. Taiwan's Nantex saw its sales in the second quarter return to an upward trend after 10 quarters, with improvements in selling prices and sales volume alongside the effects of capacity expansion.

Lee said, "In the third quarter, industry investment sentiment was dampened by macro uncertainties and delayed recovery of the Chinese economy, but with the PBR (Price-to-Book Ratio) falling to around 0.7 times and considering the strong market conditions of synthetic rubber, the undervaluation appeal remains valid. Differentiated performance and stock price trends within the industry are expected in the second half, through which investors can anticipate better results."