NH Investment & Securities has raised its target price for KCC from 680,000 won to 730,000 won, citing expected improvements in the profitability of its silicon division and an increase in shareholder returns. The firm maintained its 'buy' rating.
Lee Eun-sang, a researcher at NH Investment & Securities, stated, "The ongoing improvement in the silicon division's profitability and the continuous expansion of shareholder returns are positive developments. We have adjusted the target price to reflect the increase in equity value and the reduction in the number of shares due to stock buybacks."
The silicon division is expected to enter a phase of structural profit recovery. Lee noted, "The company is reducing its mix of low-cost products while expanding high-margin product lines in healthcare, cosmetics, and electronics, along with price increases. This is based on the resolution of supply excess and rising cost pressures."
He added, "The closure of Dow's UK plant and the sale of Elkem's silicon division are reshaping the global silicon supply chain. The operating profit margin for the silicon division is projected to improve by 4 percentage points year-on-year to 5% in the second half of 2026."
The expansion of shareholder returns was also viewed positively. Lee mentioned, "On August 20, the company presented a plan to enhance corporate value through the utilization of its stake in Samsung C&T. The potential dividend from Samsung C&T is estimated at 220 billion won, and assuming a return rate of 50%, a dividend of approximately 15,000 won per share is expected to be paid in 2028."
He also expressed expectations for increased shareholder value from stock buybacks, stating, "According to the plan announced on March 9, the company intends to retire 77% of its treasury shares by September 2027, which corresponds to 13% of the total number of issued shares."
Lee concluded, "While the utilization of the Samsung C&T stake has been settled with a special dividend, the possibility of selling shares to improve the company's credit rating remains open, highlighting the potential for continued expansion of shareholder returns."
* This article has been translated by AI.
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