Mirae Asset Securities has reiterated its buy rating and target price of 160,000 won on Kumho Petrochemical (KOSPI: 011780), even after the South Korean chemicals group reported second-quarter 2026 operating profit of 339bn won — a figure that beat market consensus by 132%. The brokerage's restraint reflects a clear-eyed assessment: the earnings surge was a geopolitical accident, not a structural breakthrough.
The scale of the quarterly swing is striking. Operating profit jumped 471% from the previous quarter. To put that in context, the company earned just 27.2bn won for the whole of 2025 and 27.3bn won in 2024; in a single quarter it surpassed two years' worth of annual profit. The synthetic rubber division led the charge, contributing 189.8bn won to the total. The catalyst was the US-Iran conflict, which disrupted operations at rival NB latex producers in the region, tightening supply and allowing Kumho Petrochemical to push through sharply higher selling prices and wider spreads. Its synthetic resins, phenol derivatives, and EPDM/TPV divisions also benefited as raw-material supply concerns drove spread expansion across the board.
Mirae Asset expects the reversal to be swift. Butadiene prices, which spiked to $2,500 per tonne during the second quarter, had tumbled to around $1,100 by late June. Styrene monomer (SM) retreated from $1,300 to roughly $1,100 per tonne. Because of the roughly six-week lag between raw-material procurement and finished-product pricing — a structural feature of petrochemical accounting — the third quarter will face the worst of both worlds: expensive inventory being processed at the same time as selling prices fall. Mirae Asset forecasts third-quarter operating profit of just 51.8bn won, a near-85% sequential decline and broadly in line with the 59.4bn won recorded in the first quarter.
This dynamic — an earnings spike rooted in a temporary external shock rather than any improvement in the underlying business — is the central risk investors should weigh. It also explains why Mirae Asset left its target price unchanged. The brokerage's full-year 2026 operating profit estimate stands at a modest 49.1bn won, with 339bn won of that crammed into a single quarter. The implication is stark: the second half is set to look very poor relative to the first.
There is, however, a silver lining for income-oriented investors. The surge in standalone (parent-company) earnings strengthens the dividend pool. Mirae Asset forecasts a dividend per share of 2,700 won for 2026, up 58.8% from the 1,700 won paid in 2025. At the current share price of 129,600 won (as of 7th August), that implies a dividend yield of roughly 2.1% — respectable in an environment of easing interest rates.
Longer-term, two structural variables loom over the company's cost competitiveness. The first is Saudi Arabia's Shaheen project, due to come on stream in 2027, which could add substantial volumes of ethylene to regional markets and intensify supply-side pressure on the broader petrochemicals industry. The second is the potential restructuring of naphtha cracking capacity in South Korea's Yeosu petrochemical complex; should domestic capacity be retired, the resulting supply reduction could benefit Kumho Petrochemical's competitive position. The net effect of these two forces remains uncertain.
At 129,600 won, the stock trades at a 12-month forward price-to-earnings ratio of 7.4 times — a modest premium to the market average of 6.2 times, but still within what Mirae Asset considers undervalued territory on a historical basis. The shares have recovered more than 25% from their 52-week low of 103,600 won, yet remain more than 15% below the 52-week high of 153,400 won. The implied upside to Mirae Asset's target price is 23.5%.
In short, Kumho Petrochemical is basking in the afterglow of an exceptional quarter while confronting a rapid return to earth. Mirae Asset's view is that patient investors focused on dividends and medium-term structural change — rather than short-term traders chasing momentum — are better placed to own the stock. Given the outsized role of commodity price volatility and geopolitical risk in determining earnings, however, any investment thesis should be stress-tested against multiple scenarios.