Daol Investment Securities announced on June 4 that it has raised its target price for Korea Carbon from 57,000 won to 61,000 won, an increase of 7%, citing strengthened growth momentum from expanded LNG ship orders and defense production capacity. The firm maintained its "buy" rating.
Choi Kwang-sik, a researcher at Daol Investment Securities, stated, "The order for NO96 SUPER+ has established a growth foundation that can surpass the upper limit of LNG ship orders from Samsung Heavy Industries and HD Hyundai. Multiple growth factors, including investments in the Miryang industrial complex, the start of defense production, and the establishment of a U.S. subsidiary, are on the horizon."
In the first quarter of this year, Korea Carbon reported sales of 211.8 billion won and an operating profit of 41.1 billion won. Although sales decreased by 6% compared to the same period last year, operating profit increased by 32%, exceeding market expectations. Analysts attribute the improvement in profitability to rising average selling prices (ASP), favorable exchange rates, enhanced productivity from new facilities, better management of partner companies, and reduced losses from new businesses.
Despite rising raw material prices, such as methylene diphenyl diisocyanate (MDI), due to the conflict in the Middle East, the impact is expected to be limited. Considering inventory levels of about two months, cost pressures may be reflected in the second and third quarters; however, improvements in new facility productivity, contributions from the defense sector, and favorable exchange rates are expected to offset much of this.
Daol Investment Securities anticipates that the performance improvement in 2027 will be even greater than in 2026. This year, sales are expected to be around 950 billion won, with operating profit projected in the mid-160 billion won range. Choi noted, "The significant rise in ASP since 2023 will be fully reflected, and the contribution from the defense sector will also expand."
The firm positively assessed the recent order for insulation materials for four LNG ships from Hanwha Ocean, valued at approximately 72 billion won. This order is estimated to utilize the NO96 SUPER+ method, which improves the boil-off rate (BOR). Choi described it as a "monumental event" that could surpass the upper limit of 50 LNG ships from Samsung Heavy Industries and HD Hyundai, adding that demand for very large ethane carriers (VLEC) and floating liquefied natural gas production facilities (FLNG) could further sustain growth.
Investment in the Miryang industrial complex is also seen as a positive factor. Korea Carbon plans to expand its production capacity for the SB (Triple-X) product, which is exclusively approved by GTT, from 80 LNG ships to 100 ships through automated facilities.
The defense sector is also expected to contribute significantly to performance. After recording losses during the development, prototype production, and testing phases, the company began mass production last year and is attempting to turn a profit through increased deliveries of Cheongung and the Korean Vertical Launching System (KVLS-II).
* This article has been translated by AI.
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