Deficit Quagmire
Lotte Chemical’s share price plummeted to its lowest level of the year on Aug. 9. Goldman Sachs, providing a bearish outlook, set a target price of 100,000 won for Lotte Chemical, suggesting it could fall about 30% more, after it had dropped over 6% on the day.
According to the Korea Exchange, Lotte Chemical ended trading at 143,400 won, down 6.58%.
After Lotte Chemical announced disappointing Q2 results, securities firms have been lowering their target prices, prompting investors to sell.
Goldman Sachs maintained its sell opinion on Lotte Chemical and downgraded its target price from 115,000 won to 100,000 won, a level 30% lower than the current share price.
Domestic securities companies also poured out negative views on Lotte Chemical. Kiwoom Securities practically issued a sell opinion as they set Lotte Chemical’s target price at 139,000 won, lower than the current price.
The securities market is skeptical about Lotte Chemical’s survival strategy to find a breakthrough in secondary battery materials and others.
Lotte Chemical is making investments exceeding 4 trillion won annually to expand the proportion of high-value-added products like secondary battery separator polymer and solar energy materials. However, experts pointed out that Lotte Chemical is struggling with a deteriorating financial structure due to continuous deficits and a downgraded credit rating, which may lead to difficulties in fundraising.