[Click e-Stock] "UNID's Q1 Results Significantly Exceed Expectations"

On April 24, Hana Securities maintained its "Buy" investment rating and target price of 120,000 won for UNID, stating that the company's first-quarter results significantly exceeded the market consensus.

On this day, Yoon Jaesung, a researcher at Hana Securities, explained, "UNID's first-quarter operating profit was 28.7 billion won, up 130% from the previous quarter and 4% from the same period last year. This figure is 28% higher than the recently raised consensus of 22.4 billion won."

The strong performance was attributed to several factors: an increase in the exchange rate; higher sales volume; a reduction in selling expenses due to lower shipping costs (approximately 3 billion won); the removal of one-off losses from the previous quarter such as bonuses and annual maintenance (about 3 to 4 billion won); and the elimination of initial operating costs due to improved operating rates at the Yichang Project (UHC) in China.

Operating profit from the domestic subsidiary was 18.7 billion won, up 236% from the previous quarter. This was due to the operating rate rising from 73% to 86%, which led to a 5% increase in sales volume. The Chinese subsidiary's operating profit also improved significantly to 9.2 billion won, up 127% from the previous quarter. This was thanks to increased sales volume following the UHC project's maximum operation since mid-February and the reflection of price increases from last month.

Second-quarter operating profit is projected to be 39.1 billion won, up 36% from the previous quarter and 12% from the same period last year. Researcher Yoon explained, "This is due to the effect of increased volume as the peak season begins and price hikes reflecting higher raw material costs," adding, "Operating profit for the Korean subsidiary is expected to be 20.7 billion won, and for the Chinese subsidiary, 17.9 billion won."

This year's operating profit is expected to reach 139.8 billion won, a 46% increase from last year, approaching an all-time high. Yoon noted, "The company's previous production capacity was only 680,000 tons, but with the second expansion in Ulsan and the expansion of the UHC plant in China, total capacity has increased by about 20% to 810,000 tons." He added, "It is also important to consider the potential for reducing chlorine-related losses due to the new operation of chlorinated paraffin wax (CPs) in China." He further commented that major energy companies are focusing on carbon capture technology, which is seen as a solution to scenarios such as power shortages in the United States and a decline in oil production after reaching its peak between 2027 and 2030, and that this is also a positive factor.

Yoon highlighted, "Most of the Chinese subsidiary's sales are for the domestic market, and only 7% of the Korean subsidiary's sales are to the United States, making the company relatively insulated from tariff wars." He added, "Given the potential for a revaluation of the company's valuation due to the growth of the carbon capture market, clear improvement in earnings, and this year's estimated return on equity (ROE) of 9.8%, the current share price is absolutely undervalued with a price-to-book ratio (PBR) of 0.49 and a price-to-earnings ratio (PER) of 5.26."