DAOL Investment & Securities forecasted on the 12th that Hankuk Carbon will begin a sharp performance turnaround this year.
DAOL Investment & Securities resumed coverage on Hankuk Carbon, stating a buy recommendation and setting a target price of 33,000 won, which is 56.8% higher than the previous closing price of 21,050 won.
Hankuk Carbon entered a period of stagnant profits after a production facility fire in 2023. However, research analyst Choi Kwang-sik at DAOL Investment & Securities projected that Hankuk Carbon's revenue from insulating materials will reach 696.3 billion won this year, a 15% increase from last year. He also expected the related operating profit to jump to 91.7 billion won.
Research analyst Choi noted, "Hankuk Carbon has expanded its production capacity and introduced new facilities, leading to a rise in insulating material prices due to the increase in ship new building prices."
Insulating materials are used to maintain the temperature inside the cargo hold of LNG carriers below the boiling point of natural gas, which is minus 163 degrees. Ultimately, the demand for insulating materials will continue only if the shipbuilding industry secures steady orders for LNG carriers.
Choi expected strong orders for LNG ships in the second half of this year. He mentioned, "According to Clarkson Research, a British shipbuilding and shipping market analysis firm, 111 LNG carriers will be needed for LNG terminals by 2029," adding that he expects major Korean shipbuilders to start marketing slots for 2029 at some point in the second half of this year.
As orders for LNG carriers continue to exceed the construction capacity of Korean shipbuilders, some quantities have shifted to Chinese shipbuilders. However, it is estimated that Chinese shipbuilders are procuring insulating materials through local companies.
Choi assessed that opportunities for securing orders for insulating materials still remain. He specifically explained that regarding secondary barriers, which China cannot self-procure, they will inevitably depend on Hankuk Carbon, which has a monopoly on supply.
Choi stated, "Hankuk Carbon will play a significant role in improving profitability and breaking its all-time high operating profit by 2028."