[Click e-Stock] "OCI Holdings Enters Earnings Rebound Phase on Polysilicon Recovery and U.S. Policy Momentum"

On January 13, Mirae Asset Securities analyzed that OCI Holdings is entering a full-fledged earnings rebound phase, supported by a recovery in the polysilicon industry and momentum from U.S. policy developments. Accordingly, the company maintained its target price of 1,460,000 won and a 'Buy' investment opinion.

Jinho Lee, a researcher at Mirae Asset Securities, stated, "Although the anticipated U.S. policy announcement has been slightly delayed due to the government shutdown, we still expect it to have a significant impact once it is released."

The existing investment points for OCI Holdings remain valid. Lee explained, "The previous investment points-structural adjustments in China's polysilicon sector and surging demand for non-China polysilicon-are still intact. Considering the ramp-up of the new wafer plant in Vietnam in the first quarter, the solar and ESS project pipelines secured under safe harbor, and even the data center infrastructure development business, the upside potential remains significant."

Although fourth-quarter results are expected to fall short of market expectations, it is meaningful that the company has passed the bottom. OCI Holdings’ fourth-quarter operating profit is projected at 1.74 billion won, 44% below the consensus estimate of 3.1 billion won, but it is expected to turn to profit from an operating loss of 5.33 billion won in the previous quarter. Lee explained, "The shortfall versus consensus is due to weaker-than-expected results from OCISE and OCIE."

OCISE, which operates the cogeneration plant, is expected to post an operating loss of 920 million won due to a decline in SMP and maintenance work. OCIE, which handles the U.S. solar business, is also projected to record an operating loss of 1.64 billion won due to the absence of gains from the sale of power generation assets and the burden of fixed costs at the module plant. Lee stated, "OCISE underperformed due to the decline in SMP and maintenance work, while OCIE is expected to post a loss due to the absence of asset sale gains and the impact of fixed costs at the module plant."

In contrast, the core polysilicon business division is showing a clear recovery trend. The Malaysian polysilicon plant, OCITS, is estimated to have operated at around 80% capacity in the fourth quarter, with an operating margin of approximately 17.4%, and is expected to deliver an operating profit of 3.31 billion won. Lee assessed, "OCITS, the polysilicon plant, is steadily recovering its performance."

The market is focusing on the U.S. policy events scheduled for the first quarter. Lee pointed out, "There are two major events to watch for the company in the first quarter: the announcement of the Section 232 investigation results and the release of the Prohibited Foreign Entity (PFE) guidelines." Section 232 is a regulation targeting Chinese solar polysilicon, and such regulations have already been applied to semiconductor-grade polysilicon. Lee said, "The results of the investigation into solar polysilicon are expected to be announced within the first quarter. If the results are favorable, it could drive up prices for non-China polysilicon."

The other variable, the PFE guidelines, will prohibit U.S. production subsidies from 2026 if the share of Chinese-made components exceeds 50%. Lee emphasized, "If clear guidelines are announced on how to calculate the share of Chinese-made components, it is expected to have a positive impact on the overall non-China value chain and lead to favorable stock price movements."