Lotte Fine Chemical has seen its stock price plunge over 30% in the past three months from a high of 72,200 won recorded on April 29, yet securities firms are raising their target prices for the company. Five major domestic brokerages forecast the chemical manufacturer will achieve second-quarter revenue of 514.8 billion won and operating profit of 37.4 billion won, representing year-over-year increases of 21.23% and 330.34% respectively. The upgrades reflect expectations of business improvement driven by semiconductor material TMAC sales growth and strengthening performance across chemical business segments, creating a disconnect between market sentiment and analyst outlook.
Lotte Fine Chemical Stock Falls 30% Despite Earnings Rebound Forecast
According to Yonhap Infomax current price data, Lotte Fine Chemical closed at 45,000 won on the previous trading day, down 1.42% from the prior session. The stock had surged following news of the company's commercialization of ammonia ship fuel as a fossil fuel alternative and a first-quarter earnings surprise supported by TMAC sales. However, the stock subsequently declined more than 30% from its April 29 peak of 72,200 won.
![Lotte Fine Chemical stock price trend since last year]()
Lotte Fine Chemical stock price trend since last year [Source: Yonhap Infomax]
Despite the rapid cooling in share price, the company's business operations were assessed as proceeding smoothly.
Securities Firms Project Q2 Operating Profit Surge of 330%
Yonhap Infomax compiled earnings forecasts from five major domestic securities firms that issued reports within the past three months. On a consolidated basis, Lotte Fine Chemical is expected to record second-quarter revenue of 514.8 billion won and operating profit of 37.4 billion won. Compared to the same period last year, revenue would increase 21.23% and operating profit would surge 330.34%.
![Lotte Fine Chemical Q2 earnings forecast for this year]()
Lotte Fine Chemical Q2 earnings forecast for this year [Source: Yonhap AI Platform]
Securities firms expect overall business segment performance to improve compared to the previous quarter.
TMAC Semiconductor Material Sales Drive Growth Expectations
Particular attention focused on the growth trajectory of TMAC, which is experiencing increased demand due to the semiconductor boom. TMAC is a raw material for TMAH (tetramethylammonium hydroxide), used in micro-circuit pattern formation processes. The company previously disclosed that TMAC sales volume recorded double-digit growth rates in the first quarter.
Handeok Chemical, a Lotte chemical group affiliate, also began construction on a new Pyeongtaek plant last month to expand TMAH production capacity. The investment aims to proactively respond to future demand increases.
Han Seung-jae, analyst at DB Securities, evaluated: "Considering the rebound in green materials profits, TMAC growth driven by the semiconductor boom, and improved chemical profit fundamentals, solid annual profit growth is anticipated."
Brokerages Raise Target Prices Up to 82,000 Won
Some securities firms recently raised their annual operating profit estimates along with target prices. KB Securities increased its target price from the previous 56,000 won to 67,000 won. Samsung Securities and IBK Investment Securities also raised their target prices to 82,000 won and 86,000 won respectively, while remaining firms maintained existing target prices of 60,000 won and 100,000 won.
Cho Hyun-ryeol, researcher at Samsung Securities, stated: "We raise this year's return on equity (ROE) from the previous 7.0% to 10.7%. We also further raise the target price from 65,000 won to 82,000 won. The steepening ROE improvement trend is positive for valuation."
FAQ
Q: Why did Lotte Fine Chemical stocks fall 30% despite positive earnings forecasts?
A: Lotte Fine Chemical's stock declined over 30% from its April 29 high of 72,200 won to 45,000 won despite securities firms forecasting second-quarter operating profit growth of 330.34% year-over-year. The disconnect between stock performance and business fundamentals has drawn investor attention as brokerages raise target prices based on semiconductor material TMAC sales growth and improving chemical segment performance.
Q: What are securities firms projecting for Lotte Fine Chemical's second-quarter earnings?
A: Five major domestic securities firms forecast Lotte Fine Chemical will achieve second-quarter consolidated revenue of 514.8 billion won and operating profit of 37.4 billion won, representing year-over-year increases of 21.23% and 330.34% respectively. The projections reflect expected improvements across business segments, particularly in semiconductor material TMAC sales.
Q: How much have brokerages raised their target prices for Lotte Fine Chemical stocks?
A: KB Securities raised its target price from 56,000 won to 67,000 won. Samsung Securities increased its target from 65,000 won to 82,000 won, while IBK Investment Securities set a target of 86,000 won. Samsung Securities also raised its ROE estimate for the year from 7.0% to 10.7%, citing the steepening improvement trend as positive for valuation.
