Kukdo Chemical(007690): Earnings boosted on robust epoxy sales
- 2Q comment
- Reiterate BUY recommendation and TP of KRW25,000
> Reiterate BUY and TP of KRW25,000 for the following reasons:
1) Sharp increase in China’s epoxy demands is creating huge supply shortage in the Asian market. Domestic epoxy sales grew 35.0% y/y in 1H06, and Kukdo Chemical is the biggest beneficiary.
2) Kukdo Chemical’s 2Q06 OP sharply increased to KRW5.3bn(+141% y/y, +14.9% q/q). Short-supply of epoxy will continue to be witnessed throughout and after 2H06. Earnings momentum of the company should remain substantial. FY06 OP is estimated to come in at KRW21.4bn(+48.6% y/y).
3) We expect cash dividend to be KRW900 for FY06(estimated payout ratio 30%, dividend rate based on face value 18%, KRW750 in FY05). Based on current share price of KRW16,000(7/27), dividend yield is about 5.6%. |
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