Yuanta Securities Korea said on the 18th that Kumho Petrochemical is expected to benefit next year from a recovery in the NB latex market and restructuring of naphtha cracking center (NCC) facilities in Asia. The firm raised its target price to 200,000 won from 180,000 won and maintained a buy rating. The previous trading day's closing price of Kumho Petrochemical was 120,100 won.
Yuanta Securities Korea estimated Kumho Petrochemical's revenue next year at 7.2 trillion won, operating profit at 368.6 billion won, and net profit attributable to controlling shareholders at 395.6 billion won. Operating profit, which was 272.8 billion won last year and 312.3 billion won this year, is expected to show a recovery.
Hwang Gyu-won, an analyst at Yuanta Securities Korea, said, "We raised next year's target price to reflect the recovery in the NB latex and butadiene markets and the improvement in the financial position."
Hwang said, "In particular, as most capacity additions are completed next year, capital expenditures (CAPEX) will decrease to 250 billion won," adding, "Cash that can be generated from operating activities will be 565.5 billion won, resulting in cash accumulation of around 310 billion won." If the financial position turns to net cash, the company can expand through mergers and acquisitions (M&A) in areas such as specialty rubber and battery materials.
Kumho Petrochemical's NB latex capacity utilization of 950,000 tons is expected to rise from 54% this year to 65% next year and 75% in 2027. From 2026 to 2027, more than 13 million tons of ethylene facilities in Europe, Korea, Japan, and China will be shut, and byproduct butadiene is also projected to decrease by more than 1.4 million tons.
Hwang said, "Competition to secure butadiene will intensify, centered on tire and latex companies, leading to an improvement in spreads across the butadiene chain."