Korea Cement Outlook: Addressing regulatory issues
Major issues and conclusions
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- The burden of greenhouse gas emissions allowances for 2018-2020 coupled with the possible introduction of a regional development tax could dampen the earnings of cement producers from 2018.
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- However, worries have dissipated somewhat recently as the 2018 quota for greenhouse gas emissions has been confirmed and the proposed bill to revise the regional tax has failed to pass the parliament.
Industry and stock outlook
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- With the 2018 quota for greenhouse gas emissions similar to the average annual quota set for 2015-2017, earnings deterioration at cement manufacturers should be limited.
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- The regional development tax could still be introduced but we believe the chances are slim because of the lack of justification for double taxation.
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- The direction of cement shares will eventually be determined by the price of cement.
Hanil Cement is engaged in the manufacture of cement, ready-mixed concrete ("remicon") and ready-mixed mortar ("remitar"). Co.'s portland cement has five types based on usage which are ordinary portland cement, moderate-heat portland cement, high-early strength portland cement, sulfate-resistance portland cement and blast furnace slag cement. The remicon refers to concrete in which materials were mixed in advance according to the mixing ratio designed by a plant equipped with concrete manufacturing facilities. Its remicon includes good-glowability concrete, low-heat concrete, cold-weather concrete, hot-weather concrete, light-weight concrete and surface glossing concrete.
Hyundai Motor Investment & Securities is the investment banking arm of the Hyundai Motor Group. The company offers stock brokerage and advisory services; derivative products brokerage and advisory services; wrap account portfolio management services; and VIP wealth management and tax planning, institutional equities, derivatives, and futures brokerage services, as well as sells investment and institutional products. It also provides equity offering, ABS, real estate PF and real estate PF securitization, offshore SOC, structured financing, asset securitization, real estate sales, IPO advisory, and private equity fund and fund management services; and CMA/RP portfolio management and fixed income based investments, as well as involved in the issuance, management, and brokerage of OTC derivatives. In addition, the company offers research services, including macro economic forecasts and stock market outlook, industry overviews and forecasts, fixed income strategies, corporate credit analysis, and valuation analysis. Further, it offers a range of retirement and pension services for individuals and corporate members; portfolios and asset allocation consulting and marketing services; proposing retirement pension plans; contract and payment management services; pension plan advisory and actuarial services; and system development and implementation services, as well as operates call centers for retirement pension services, etc.
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