[Edaily Reporter Kwon Oh Seok ] Yuanta Securities Korea announced on the 22nd that it is maintaining its “Buy” rating and 180,000 won target price for KOREA PETRO CHEMICAL IND(006650).

Hwang Kyu-won, an analyst at Yuanta Securities Korea, stated, “The company is exposed to earnings volatility in the second half of 2026. Projected earnings for 2026 are revenue of 3.2 trillion won, operating profit of
71 billion won (operating margin of 2.2%), and net income attributable to controlling shareholders of 47.4 billion won,” adding, “While operating profit will increase compared to 52.7 billion won in 2025, caution is warranted regarding fluctuations in the second half of the year. A shift to a loss is inevitable, from the third-quarter estimate of 26.3 billion won to a loss of 25 billion won in the fourth quarter. Amid a trend of negative NC spreads, production will be suspended from October through the end of November due to large-scale scheduled maintenance,” he analyzed.
He pointed out that there are several hurdles to overcome by the first half of 2027. Analyst Hwang stated, “There is a concentrated expansion of 8.08 million metric tons of global ethylene capacity. China’s ‘PetroChina’ (1.2 million metric tons), South Korea’s ‘S-OilCorporation’ (1.8 million metric tons), and the U.S.’s ‘Golden Triangle Polymer’ (2.08 million metric tons) are all in the pipeline,” he emphasized, adding, “As the restructuring in Ulsan is delayed, the likelihood of a ‘chicken game’ is increasing. This is because S-OilCorporation’s Shahin facility, with a capacity of 1.8 million metric tons, will begin operations while SK GeoCentric continues to operate its 660,000-metric-ton facility.”
He continued, “Changes in raw material procurement methods could lead to additional costs. While S-OilCorporation previously supplied 70% of the naphtha, the company will switch to imports starting in late 2026. Transportation costs could increase by about $5 to $10 per metric ton.”
Regarding why the target price remains unchanged despite weak fundamentals in the second half of 2026, he explained, “This is because two key expectations remain valid.” He added, “Following the start-up of major global petrochemical plants, new capacity additions are expected to decline from mid-2027 to 2028, while plant closures are scheduled across Asia. This could alleviate pressure from oversupply.”
He added, “The company is planning to expand its specialty operations by the end of 2027. It will double the capacity of its ultra-high-purity PE for EV separators (currently 200,000 metric tons) and PP for capacitors (currently 170,000 metric tons), both of which have operating profit margins of 20–30%.”