[Edaily Reporter Shin Ha-yeon] On the 17th, Yuanta Securities maintained its “Buy” rating on #TKG Huchems, noting that the company is benefiting more significantly than expected from global supply disruptions caused by the war in Iran, and raised its target price from 28,000 won to 30,000 won. This represents an upside potential of approximately 80% relative to the current stock price.

Hwang Kyu-won, an analyst at Yuanta Securities, stated, “The simultaneous impact of a shortage of urethane materials in the Middle East and rising ammonia prices resulting from the 2026 Iran war is leading to a larger-than-expected improvement in earnings,” adding, “Operating profit for this year is projected to reach 97.2 billion won, a 48% increase from the previous year.”

In particular, the company’s earnings are expected to show a marked improvement in the second and third quarters. Analyst Hwang explained, “Second-quarter operating profit is expected to reach 33.3 billion won, exceeding the market consensus (17.7 billion won) by 88%, and third-quarter operating profit is also projected to be around 36.0 billion won.” He added, “Compared to the first-quarter operating profit of 15.2 billion won, this represents more than a doubling of earnings, and we anticipate an earnings surprise for the first time in three years since the 2022 war in Ukraine.”

Analysts note that demand for DNT—a core product of TKG Huchem—is rising due to recent disruptions in the global supply of TDI (toluene diisocyanate) caused by the conflict in Iran.

Analyst Hwang said, “As Saudi Arabia’s SABIC’s 200,000-metric-ton facility and Iran’s Karoon’s 50,000-metric-ton facility have been affected, Huchem’s DNT operating rate has risen from 71% last year to around 90% recently,” adding, “The benefits from the supply shortage are now being fully reflected in the results.”

Analysts also note that rising raw material prices are actually helping to improve earnings. He explained, “The price of ammonia, a key raw material, has risen by 116% from $379 per metric ton last year to $820 recently,” adding, “As the increase in costs is being passed directly on to product prices, this is leading to higher sales revenue while alleviating the burden of fixed costs.”

Benefits from the MDI (methylenediphenyl diisocyanate) value chain are also expected. Analyst Hwang predicted, “MDI supply remains tight due to production disruptions in the Middle East,” adding, “Although MNB facility operations were partially restricted due to scheduled maintenance in the second quarter, its contribution to profits is expected to expand starting in the third quarter.”

The rise in the value of carbon emission allowances was also cited as a factor driving the stock’s revaluation. Yuanta Securities highlighted that, with the implementation of the 4th Emissions Trading System starting in 2026, the price of carbon emission allowances has risen from 9,700 won per metric ton last year to around 23,000 won recently. TKG Huchems holds approximately 4.5 million metric tons of carbon emission allowances.

Analyst Hwang stated, “We have raised our fair value estimate to reflect the improvement in value resulting from the rise in carbon credit prices,” adding, “With the South Korean government’s 4th Carbon Emission Trading Scheme set to take effect in 2026, carbon credit prices are rising sharply,” and “The impact will become more pronounced as we approach the end of the year.”