Shinyoung Securities on the 24th said OCI Holdings is expected to be re-rated from a simple solar materials-focused company to a solar and energy company. It maintained a Buy rating and raised the target price to 400,000 won from 170,000 won. The previous trading day's closing price of OCI Holdings was 322,000 won.
OCI Holdings' operating profit in the first quarter this year was 10.8 billion won, far below market expectations (consensus). This appears to have been affected by logistics delays due to the war and a wait-and-see stance on purchases amid uncertainty ahead of the U.S. Section 232 result announcement.
Shinyoung Securities expects OCI Holdings' second-quarter operating profit this year to reach a quarterly record high. It said earnings should improve on the sale of OCIE's OCI Energy project.
OCI TRS' operating profit is estimated at 29.9 billion won, and with utilization normalizing, fixed-cost burdens should ease and some of the inventory losses recognized in the previous quarter are expected to be reversed.
OCIE's operating profit is expected to surge to 73.8 billion won. That is because MSE's results should improve on growing demand for FEOC-compliant modules in the United States and the anticipated sale of a large 500-megawatt (MW) project.
The unit price of this project increased about 40% from the previous estimate as demand for solar projects in the United States grew. Shinyoung Securities also projected that a 200 MW solar project will be sold in the third quarter this year.
Sun Hong-ju of Shinyoung Securities said, "Starting this year, OCI Holdings will be re-rated from a simple solar materials-focused company to a solar materials and energy company," adding, "Elon Musk said he will expand solar module production capacity (Capa) to 100 gigawatts (GW) by 2028."
Sun added, "The sale price of OCI Energy's projects is also rising," and "It is currently the No. 1 developer and seller of solar and ESS projects in the Texas market and holds a 6.6 GW pipeline eligible for ITC."