NH Investment & Securities said on the 11th that KCC's corporate value is expected to normalize on expectations of a step-by-step cancellation of treasury shares and an industry upturn. It raised its target price to 680,000 won from 530,000 won. KCC closed the previous trading day at 511,000 won.
KCC said in a filing on the 9th that it will partitioning-cancel about 13.2% (1,174,300 shares) of its 17.2% (1,532,300 shares) treasury holdings by 2027, and use 4% (358,000 shares) for employee compensation within four years.
Lee Eun-sang, an analyst at NH Investment & Securities, said, "The plan to cancel treasury shares is meaningful beyond a simple improvement in earnings per share (EPS) because it removes uncertainty related to treasury shares," and noted, "This could lead to a fundamental multiple re-rating."
A favorable industry backdrop is also cited as a driver of value normalization. The analyst said, "In the global silicone industry, the closure of the U.K. plant and Elkem's restructuring are overlapping, putting the market in a phase where oversupply is easing," adding, "On top of this, the implementation of China's value-added tax law and higher costs from lower operating rates at silicon metal producers are increasing upward pressure on costs, which will strengthen the downside stickiness of silicone shipment prices and widen margin spreads."
Accordingly, NH Investment & Securities raised its target price for KCC. Previously, it applied a 50% discount to the 2026 EV/EBITDA (enterprise value divided by operating cash-generating capacity) average of global silicone corporations Shin-Etsu, Wacker and Elkem, but it reduced the discount to 30% and presented a target price of 680,000 won.