Equity Analyst focused on Korea Stock Market

Thomas Yi

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/1726" target="_blank" data-smartkarma-citation="entities:1726:1">Huchems Fine Chemical (069260 KS)</a>, one of the largest basic chemicals company in Korea has suffered from share price plunge during last 2 months, due to the market’s concerns over earnings deterioration. Especially, due to large size TDI capacity expansion in 4Q18, investors concern over the TDI-Toluene spread, which impacts on the company’s earnings. However, the spread impact on the earnings is less than 30% of total earnings. And we believe the spread trend should be milder than expected, considering an old TDI plant shutdown (estimated 80,000 tonne/year) in 2019, significantly declined TDI inventory level, and required period for the first start-up. The company’s share price has plummeted enough to near historical trough, and offers now higher than 6% of dividend yield. While the company may not be the best stock, we believe it is a good one for long-term investor’s portfolio.<ul><li>
Stock Information (2018/ 9/ 20) Share price: KRW 23,950/ Market Cap: KRW 979bn, Trading Volume (@60 days): 111,885 shares, Historical price (52 weeks: Highest/Lowest) KRW 32,700/KRW 22,600, Absolute Return (3 month) -15.96%, Major shareholders: Taekwang Ind and others 43.5%/ National Pension Service (NPS) 10.2%/ Nonghyup Agribusiness 8.3%/ Treasury stock 0.5%
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Huchems Fine Chemical (069260 KS), one of the largest basic chemicals company in Korea has suffered from share price plunge during last 2 months, due to the market’s concerns over earnings deterioration. Especially, due to large size TDI capacity expansion in 4Q18, investors concern over the TDI-Toluene spread, which impacts on the company’s earnings. However, the spread impact on the earnings is less than 30% of total earnings. And we believe the spread trend should be milder than expected, considering an old TDI plant shutdown (estimated 80,000 tonne/year) in 2019, significantly declined TDI inventory level, and required period for the first start-up. The company’s share price has plummeted enough to near historical trough, and offers now higher than 6% of dividend yield. While the company may not be the best stock, we believe it is a good one for long-term investor’s portfolio.
Stock Information (2018/ 9/ 20) Share price: KRW 23,950/ Market Cap: KRW 979bn, Trading Volume (@60 days): 111,885 shares, Historical price (52 weeks: Highest/Lowest) KRW 32,700/KRW 22,600, Absolute Return (3 month) -15.96%, Major shareholders: Taekwang Ind and others 43.5%/ National Pension Service (NPS) 10.2%/ Nonghyup Agribusiness 8.3%/ Treasury stock 0.5%


Huchems (069260 KS) “Shares near Trough and Offer High Dividend”