[Click e-Stock] "KCC Expected to Achieve Record-High Earnings This Year... Target Price Raised"

On August 5, Hana Securities raised its target price for KCC from 440,000 won to 520,000 won, stating that the company is expected to achieve record-high earnings this year.

Yoon Jaesung, a research analyst at Hana Securities, maintained a 'Buy' rating on KCC on this day and made this announcement. Yoon commented, "With a recovery in the silicone business, KCC is expected to post record-high results in 2025," adding, "Second-quarter operating profit (140.4 billion won) exceeded consensus by 18%. Operating profit for the third quarter is also expected to improve further."

The newly raised target price is not only significantly higher than the previous day's closing price of 376,000 won per share, but also represents a double-digit increase compared to the previous target price of 440,000 won.

Yoon explained, "We have raised our earnings estimates for 2025 and 2026, and applied a price-to-book ratio (PBR) of 0.7 times, which was recorded in 2021-2022." He analyzed, "Given that the current business environment is more favorable than it was then, this is a conservative target multiple." As the basis for this, he cited: ▲ stronger earnings power in the building materials and coatings businesses ▲ the company's strong commitment to value-up initiatives and debt reduction ▲ improved visibility for 2-3 years of profit growth in silicone due to the absence of new capacity additions in China and restructuring efforts.

In particular, Yoon predicted that the improvement in the silicone market will drive KCC's annual performance. He stated, "This year's operating profit is expected to reach a record-high of 522.7 billion won, up 11% from the previous year. This is because the increase in silicone operating profit by 107.9 billion won will offset the decline in building materials." He further projected, "Silicone will enter an upcycle through 2026."

The background for the silicone upcycle includes: ▲ limited new capacity additions in 2025-2026 ▲ the July 5 announcement of the organic silicone industry rectification guideline by China's MIIT and the July 18 announcement of the organic silicone industry standard conditions ▲ the July 20 explosion accident at Shandong Dongyue ▲ Dow's announcement of the closure of its UK Barry siloxane (DMC) plant in mid-2026.

He stated, "It is important to pay attention to the company's commitment to achieving a PBR of at least 1, expectations for mandatory cancellation of treasury shares, and the strong possibility of a significant turnaround in the silicone business." He named KCC as his top pick in the sector.