Hyundai Motor Securities on the 1st said profits are expected to improve at LOTTE Chemical through restructuring, but the industry outlook remains uncertain. It kept its "Marketperform (market return)" rating and raised its target price to 77,000 won from 65,000 won. LOTTE Chemical closed at 72,700 won that day.
Researcher Kang Dong-jin at Hyundai Motor Securities said, "Going forward, there is a strong possibility that LOTTE Chemical will shut down the 1.1 million-ton NCC at the Daesan plant and stabilize profitability by lifting the operating rate," and "we expect mid- to long-term efficiency to improve."
However, Kang said the industry uncertainty remains high. The reason is that it will be difficult to see a sharp profit improvement next year, with about 10 million tons (t) of ethylene capacity additions scheduled, centered on China, in the general-purpose chemicals market.
Kang said, "Cost burdens may ease with the drop in international oil prices, slightly narrowing losses at subsidiaries such as LOTTE Chemical Titan, but a full-fledged swing to profit is difficult to expect," and "with continued production increases, price gains are likely to be limited."
He added, "The profitability of the newly operating Indonesia LINE project also needs to be verified," and estimated that next year LOTTE Chemical will post 19.7 trillion won in sales and a 447.2 billion won operating loss.