[Click eStock] "Lotte Chemical, Target Price Lowered by 4%"

NH Investment & Securities on the 8th lowered the target price for Lotte Chemical from 90,000 KRW to 86,000 KRW, a 4% decrease. The investment rating was maintained at 'Neutral.'

In the mid to long term, it is expected that the profitability of general-purpose products such as basic feedstock and synthetic resins will continue to fall below the breakeven point. Lotte Chemical's operating losses are projected to persist until 2026. Although next year's capital expenditure (Capex) is expected to decrease to approximately 1.7 trillion KRW from about 3 trillion KRW this year, due to the continued sluggish market conditions and poor performance, a deterioration in the financial structure, including a continued increase in net borrowings, is deemed inevitable.

Sales recorded 5.2 trillion KRW, and an operating loss of 413.6 billion KRW was reported, significantly missing market consensus. Amid ongoing spread weakness across chemical products, additional impacts included an inventory valuation loss of about 16 billion KRW due to price declines in basic materials, an opportunity loss of about 90 billion KRW due to LC USA facility maintenance, and a cost increase of about 40 billion KRW due to rising maritime freight rates. Even excluding these factors, the operating loss of 267.6 billion KRW still fell far short of market expectations.

In the fourth quarter, factors such as the end of LC USA facility maintenance and its return to normal operation, as well as a decrease in freight costs, are expected to reduce costs; however, operating losses are still forecasted to continue.