Report
EUR 17.42 For Business Accounts Only

Korea Refining/Chemical Sector Outlook

Overweight, with S-Oil/LG Chem as top picks and Hanwha Chem/Kumho Petro as stocks of interest

Maintain Overweight on the refining/chemical sector in 2018. Our top picks are S-Oil (010950.KS, BUY) and LG Chem (003490.KS, BUY) and we also like Hanwha Chemical (009830.KS, BUY) and Kumho Petrochemical (011780.KS, BUY) as stocks of interest.
 
We expect the refining sector to be in goldilocks conditions over the next two to three years as demand strengthens on the recovering economy and regulatory reforms while capacity increase is limited. On the other hand, in the chemical sector, ethylene capacity expansion will begin in earnest in North America and Asia. 
Underlying
LG Chem Ltd.

LG Chem is engaged in the business of chemicals and polymers, industrial materials and information and electronic materials. Co. provides polyvinyl chloride products, plasticizers, polyethylene compounds, acrylic acids, engineering plastics, elastomers and conductive resins. Co. also manufactures lithium-ion batteries, printed circuit materials, toner, photosensitive materials, and organic light-emitting diode (OLED) materials.

Provider
Hyundai Motor Investment & Securities
Hyundai Motor Investment & Securities

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. 

Analysts
Dongjin Kang

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