LG Chem Ltd. (051910) slumped to the lowest level in two months in Seoul trading after South Korea’s biggest chemical maker reported a smaller-than-expected quarterly profit.
Seoul-based LG Chem sank 3.0 percent to 303,500 won as of 11:07 a.m. on the Korea Exchange, to the lowest level since Nov. 28 on an intraday basis. The benchmark Kospi index rose 0.2 percent.
Net income fell 23 percent to 292.3 billion won ($270 million) in the three months ended Dec. 31 from a year earlier, LG Chem said yesterday after the market closed. That missed the 362.9 billion won average of 16 analyst estimates compiled by Bloomberg as Europe’s financial crisis and slower growth in China damped demand for ethylene and other chemical products.
“Fourth-quarter results are below our expectation,” affected by narrowed margins of petrochemical business and costs to new projects, Baek Youngchan, an analyst at Hyundai Securities Co., said by phone. “We expect earnings improvement will be possible in the first quarter while the pace would be slow.”
Baek maintains a buy recommendation on LG Chem, but reduced his six-month target price on the stock to 370,000 won from 400,000 won to reflect rising prices of raw petrochemical feeds.
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