2025-06-12-花旗集团-乐天化学（011170）_乐天化学（011170.KS）_我们对韩国潜在NCC行业整合的看法_11页_312kb

Citi Research Summary: Lotte Chemical NCC Consolidation Analysis

• Overview: Citi believes potential restructuring or consolidation between Lotte Chemical and HD Hyundai's naphtha cracker (NCC) assets, as reported, is unlikely to execute easily due to ownership structures and financial constraints.
• Key Findings: Ownership and financial hurdles make consolidation difficult; Lotte may consider injecting Daesan NCC assets into the existing Hyundai Chemical JV (40% owned by Lotte Chem), but Hyundai Oilbank's limited financial flexibility could hinder capital injection.
• Financials: Hyundai Chem has high leverage (net debt/equity of 224% in 2024), with minimal EBIT generation, suggesting possible need for equity support from Lotte Chem. Similarly, Hyundai Oilbank shows financial constraints.
• Asset Utilization: Current ethylene and polymer utilisation rates are suboptimal (e.g., Hyundai Chem's cracker at ~70%, polymer at ~38%/42%), indicating inefficiencies and need for capacity closures to optimize operations.
• Proposed Scenarios: Injection of assets into the JV or closures of specific units could improve performance and address competitive pressures.
• Implications: Citi will monitor future industry consolidation efforts in Korea and globally; a lagging earnings outlook and risk of goodwill impairment persist, even with slightly lower oil/naphtha prices limiting chem spread declines.
• Valuation: Lotte Chem's target price is W60,000, based on 0.2x trough-cycle P/BV and SOTP NAV, with segments valued at market prices.
• Risks: High risk assessment due to uncertain earnings turnaround. Downside risks include weaker chemical demand in China, oil price volatility, and faster new supply ramps; upside risks include shareholder-friendly returns or delays in China's cracker capacity.
• Recommendations: No actionable steps specified beyond monitoring, with emphasis on financial metrics and external catalysts.