[Click eStock] "Kumho Petrochemical, Market Recovery Delayed... Target Price ↓"

On the 18th, Kiwoom Securities downgraded its earnings estimates for Kumho Petrochemical, stating that the market recovery is progressing more slowly than expected. However, it maintained a 'Buy' investment rating and lowered the target price to 181,000 KRW.

Jeong Kyung-hee, a researcher at Kiwoom Securities, said, "The recovery in the synthetic rubber and latex markets is proceeding more slowly than anticipated," adding, "We adjusted the target price downward due to earnings revisions for the second half of the year and 2025."

Kiwoom Securities estimated Kumho Petrochemical's third-quarter sales to increase by 25% year-on-year to 1.9 trillion KRW, while operating profit is expected to decrease by 6% to 80 billion KRW. This figure is about 18% below the consensus estimate of 97.6 billion KRW.

Researcher Jeong explained, "The main reason is the failure to fully reflect the strength of butadiene, a key raw material, in both synthetic rubber and the average selling price (ASP) of major products."

She further analyzed, "We had assumed that major product groups such as NB-Latex, synthetic resins, and the phenol chain would enter a gradual recovery phase after 2-3 years of weak supply and demand. However, the expected shift in the replacement (R/E) tire cycle has been offset by sluggish new car (O/E) demand, causing the turnaround to proceed more slowly."