Research report of SK chemicals.(from Hyundai Securities Co. Research)-----------------------------------------Improved profitability from polyester bottle chip and TPA/DMTSK Chemicals has spun off its synthetic fiber division, that includes polyester filament & staple fiber, to set up Huvis withSamyang in which both companies own a 50% stake. The synthetic fiber division accounted for 47.2% of the company＇s operat-ingrevenue (OR) in 1999. Following the merger, terephthalic acid (TPA), which had been internally consumed as a raw materi-alfor synthetic fibers, began to be offered on the market in 2001, and TPA/dimethyl terephthalate (DMT) emerged as one of thebiggest divisions for the company, followed by polyester bottle chips, acetates and specialty chemicals. The company plans to fosterspecialty chemicals and bioengineering as key activities in the long term. Internal sales are expected to turn for the better and equitymethod valuation gains from its affiliate Huvis are expected to increase substantially starting in 2001. SK＇s financial standing,weakened from large investments in affiliates during the mid-1990s, has partially recovered with asset disposals to Huvis and anSKT share disposal in 2000. Financials are expected to further improve in 2001 with further asset disposals such as marketablesecurities and real estate. We maintain BUY on the counter considering the expected improvement in sales and financials fromthe TPA and polyester bottle chip division. Fair value is W12,000.