IBK Securities analyzed on the 17th that KCC is seeing a significant increase in the value of its equity amid a reduction in the holding company discount due to amendments to the Commercial Act, highlighting the value of its investment assets. Accordingly, the investment opinion is maintained as 'buy,' and the target price has been raised by 32.5% from the previous 400,000 won to 530,000 won.
Lee Dong-wook, a researcher at IBK Securities, noted, "KCC showed strong performance in the building materials and paint sector in 2014 due to a drop in raw material prices, stricter regulations related to energy efficiency, and expanded sales in upstream industries, and cash inflow occurred from the sale of the Suwon site," adding, "Additionally, the listing issue of Cheil Industries (now Samsung C&T) has also highlighted the value of investment assets."
He continued, "The current situation is more favorable compared to that time, as the value of Samsung C&T and HD Korea Shipbuilding & Offshore Engineering's equity has surged amid the reduction in holding company discounts due to amendments to the Commercial Act," and analyzed, "The demand from shareholders for stockholder returns related to treasury shares is likely to increase, and the financial structure has improved due to asset revaluation."
According to IBK Securities, KCC's silicon business sector is expected to generate an annual EBITDA of over 300 billion won. Additionally, with the issuance of exchange bonds (EB), approximately 100 billion won in interest expense reduction is also expected compared to the previous year. Furthermore, the fair value through profit or loss (FVPL) valuation amount increased from 2.9 trillion won in 2014 to 3.9 trillion won in the second quarter of this year, a rise of about 1 trillion won.
The researcher explained, "FVPL is sensitive to short-term market fluctuations, so conservative estimates are necessary," adding, "However, theoretically, efficient operation can lead to portfolio hedging with existing businesses in the operating sector and optimization of capital utilization."