[Click eStock] "Kumho Petrochemical, Performance Improvement Centered on Synthetic Rubber from Next Year... Target Price Down"

Target Price Revised Downward by 21% Compared to Previous Level

NH Investment & Securities lowered the target price for Kumho Petrochemical from KRW 190,000 to KRW 150,000 on the 10th, anticipating improved performance centered on robust synthetic rubber starting next year. The investment rating was maintained at 'Buy.'

Choi Young-kwang, a researcher at NH Investment & Securities, explained, "The target price downgrade reflects a decrease in comparable companies' stock prices, lowering the target multiple from 4.7x to 4.4x. Considering the slowdown in synthetic rubber price increases due to raw material price declines and the prolonged sluggishness in the synthetic resin market, we have revised down the operating profit forecast for next year by 11%. However, the performance improvement trend centered on synthetic rubber next year remains valid, and the current stock price is only about 0.4x the forward price-to-book ratio (PBR) for 2025. Amid the prolonged downturn in the petrochemical industry, Kumho Petrochemical's investment appeal is sufficient due to its stable profitability, financial structure, and low valuation."

As of November this year, the export price of Korean synthetic rubber reached USD 1,730 per ton, marking the highest level in the past two years. Researcher Choi stated, "Despite the downward adjustment of the raw material butadiene price, product prices remain relatively firm, leading to an expansion in the synthetic rubber spread."

Performance improvement is expected to begin from the first quarter of next year. Researcher Choi forecasted, "The fourth-quarter results this year are expected to decline compared to the previous quarter due to large-scale regular maintenance across business divisions and seasonal off-season effects. However, from the first quarter of next year, with the end of maintenance and off-season effects and a robust synthetic rubber market, performance improvement will continue."