April 25, 2024

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[THE INVESTOR] Kumho Petrochemical will deliver an earnings surprise in the second quarter, said KB Investment and Securities on June 15, maintaining a “buy” recommendation and raising the target price to 143,000 won (US$131.46) from 135,000 won.

Its revenue will increase 9.8 percent on-year to 1.36 trillion won and operating profit by 218 percent to 140.5 billion won, widely beating market expectations. Phenol derivatives will propel the earnings improvement, and the sector’s second-quarter operating profit will surge more than 14 times from the same period last year. Despite the routine maintenance cost, raw material benzene price has declined, said analyst Baek Yeong-chan.

With the systematic price rise of bisphenol A, operating profit from phenol derivatives this year will soar 585 percent from last year to 211.8 billion won. Rise in electricity market’s system marginal price and sales of steam following the expansion of Kumho Mitsui Chemical and Kumho Polychem will boost the energy unit’s 2018 operating profit up 42.1 percent from last year, according to Kim who maintained a “top pick” rating in chemical industry. 

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