Similar case of German chemical company ‘Wacker Chemical’ “Chemical companies entering pharmaceutical and bio business is a global standard” DS Investment & Securities “Major business is going smoothly, legal dispute between Korea and the U.S. has little impact” Outlook: “Stable pharmaceutical and bio business complements unstable solar power business”
Recently, the unusual integration of OCI Holdings and Hanmi Science has become an issue in the industry, and a positive evaluation of OCI Group’s future growth potential is drawing attention.
On the 19th, industry insiders evaluated that OCI Holdings’ full-scale expansion of business areas through integration will serve as a stepping stone for the group’s future growth. As an overseas similar case, Wacker Chemical, a German company that operates a solar polysilicon business similar to OCI, was cited. Wacker Chemical also steadily expanded its biotechnology sector, purchasing overseas production plants and biopharmaceutical and material companies. Although it started as a chemical company, it has now become a global chemical and biotechnology company that produces everything from automobile and construction materials to biopharmaceuticals, vaccines, live microbial products, food additive raw materials, and cosmetics raw materials.
From the perspective of business expansion, the integration of OCI and Hanmi Pharmaceutical Group meets the standards for the future direction of global chemical companies. The idea is that the CEO has discovered a trick that allows him to strengthen his control over the company while expanding his business.
DS Investment & Securities also published a report with a similar purpose and gave a positive evaluation of this integration. In the case of polysilicon for solar energy, which is the current main business, OCI Holdings’ Malaysian subsidiary OCIMSB is evaluated to be supplying polysilicon for solar energy to the market at a competitive price by adding a premium for non-Chinese products through a long-term supply contract. For example, OCIMSB signed a memorandum of understanding with Hanwha Solutions for long-term polysilicon supply in 2022. The main goal is to supply polysilicon for 10 years from July of this year to June 2034. The contract size is $1.2 billion (approximately KRW 1.61 trillion), equivalent to approximately 45% of OCI’s 2022 consolidated sales. It is said that the company can expect growth in its main business performance as it has signed supply contracts with a number of global companies in addition to Hanwha Solutions. OCIMSB is also planning to expand its capacity by 30,000 tons, so its performance is expected to increase in the future due to increased exports.
Regarding the integration, it was evaluated that irregular performance due to the nature of the solar energy industry, which has many ups and downs, can be offset by the relatively stable pharmaceutical business and that a mid- to long-term growth engine has been secured. The main reasons why some in the industry view the integration negatively are the loss of business identity, uncertainty about group integration synergies, decreased stock investment due to foreign portfolio adjustments, unclear profit contribution of Hanmi Science, sudden transactions, and legal issues within Hanmi Pharmaceutical Group. The back was chosen. However, DS Investment & Securities believes that its main business is still maintaining a stable flow and that profit contribution is a better option than holding cash. In addition, it was predicted that the legal issues within Hanmi Pharmaceutical Group are unlikely to intensify the competition for shares, as Hanyang Precision Chairman Shin Dong-guk, who owns 12% of the shares, is the key man. At the same time, he emphasized that Hanmi Pharmaceutical Group is not in a situation where it needs funds and the cash it has is invested in the group’s growth, so it is believed that no manager would refuse such a transaction.
After integration, OCI Holdings’ performance forecast for this year was KRW 4.091 trillion in sales and KRW 671 billion in operating profit. It was estimated that sales and operating profit would increase by 51% and 12%, respectively, compared to the previous year.
According to the business world, OCI Holdings Chairman Lee Woo-hyun is currently visiting major overseas business sites such as Japan and Malaysia to celebrate the New Year.
Kim Min-beom, Donga.com reporter mbkim@donga.com
2024-01-19 08:21:00
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