April 26, 2024

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[THE INVESTOR] Korea Petrochemical Industry Corp. will suffer from worsening market conditions and delay in resumption of naphtha cracking center, said Shinhan Investment on June 29, lowering the target price to 320,000 won (US$280.43) from 340,000 won.

It will widely miss market expectations for the second quarter with 5.7 billion won operating loss, said analyst Han Sang-won. Prices of its major products are deteriorating and spread fell 10 percent from the previous quarter, noted the analyst, adding that it was markedly dented by the delay in restarting its NCC after expansion.

Although the market conditions are not favorable, the expansion in facilities will boost its revenue significantly, and profits will improve from economies of scale and increased self-sufficiency rate, noted Han. 

If the economy recovers in the second half, its profits could increase more than expected, and there still is room for its stock price to rise, said the analyst, maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)