KCC: Thin Operating Margins, Net Income Far Above Operating Profit, Very Low Multiples

Thesis

The data supports a picture of a stable but low-margin business. Revenue has stayed in a ₩5.9T to ₩6.8T range since 2021 and operating margin has held between 5.0% and 7.1%. The data does not explain why net income jumped to ₩1.5T in 2025 and ₩3.7T on a trailing basis, which is far above operating income. A net margin of 55.5% against an operating margin of 6.2% points to large non-operating or one-off gains, but the source of those gains is not available in this data. The P/E of 1.1 and ROE of 45.6% should therefore be read with caution. The P/B of 0.4 and EV/EBITDA of 7.0 are less affected by this issue. Shares are down 6.2% over one month but up 5.0% over three months and 18.5% over one year.

Business overview

KCC is a KOSPI-listed chemicals company, founded on 1958-08-12 and listed on 1973-06-25. It has 8,886,471 listed shares and is led by co-CEOs 정몽진 and 정재훈. Revenue was ₩5.9T in 2021, ₩6.8T in 2022, ₩6.3T in 2023, ₩6.7T in 2024 and ₩6.5T in 2025. The data does not break revenue down by product or segment. The share price sits between a 52-week low of ₩336,000 and a high of ₩692,000, and the latest close is about 34.2% below the high.

Financial analysis

All figures come from filed financial statements (DART). Trailing revenue to H1 2026 was ₩6.6T, with operating income of ₩406B and a 6.2% operating margin. Annual operating income was ₩389B in 2021, ₩468B in 2022, ₩313B in 2023, ₩471B in 2024 and ₩428B in 2025. Net income was -₩46B in 2021, ₩34B in 2022, ₩213B in 2023, ₩311B in 2024 and ₩1.5T in 2025, then ₩3.7T trailing. ROE rose from -0.9% in 2021 to 23.9% in 2025 and 45.6% trailing. Liabilities to equity is 91.7%. Cash is ₩1.2T against borrowings of ₩2.5T, and trailing free cash flow is ₩270B.

Valuation

Current multiples are P/E 1.1, P/B 0.4, P/S 0.6, EV/EBITDA 7.0 and a dividend yield of 0.9%. Enterprise value is ₩5.3T. At the end of 2025 the P/E was 2.4 and the P/B 0.5, so both are lower now. Earlier year-end multiples are not available. Among listed peers in the data, P/B is 0.5 for LG Chem, 0.6 for Hanwha and Hanwha Solutions, and 1.8 for SKC. Soulbrain's P/B is not available. KCC's 0.4 is the lowest of this group. Peer P/E is available only for Hanwha at 10.3, and the others are not available, which limits comparison. KCC's P/E is depressed by the large net income figure.

Catalysts

• The H1 2026 half-year report was filed on 2026-08-14, following preliminary consolidated earnings on 2026-08-05, so the latest figures are now public.
• A corporate value-up plan was filed on 2026-08-20, which may bear on shareholder returns and valuation.
• Several 5%+ holding reports were filed (2026-07-31, 2026-08-20 and 2026-09-08), showing changes in major shareholdings.
• An IR event was held on 2026-08-18, though the data does not give its content.
• Related-party transaction filings on 2026-09-17 and a securities issuance report on 2026-07-30 may be relevant to group dealings and capital structure.

Risks

• Net income is far above operating income, and the data does not explain the gap, so earnings quality is uncertain.
• Operating margin is thin at 6.2% and has not risen above 7.1% in five years.
• Borrowings of ₩2.5T are about double cash of ₩1.2T, and liabilities to equity is 91.7%.
• Revenue fell 2.6% in 2025 and has been uneven since 2021, with no clear growth trend.
• Investor flow, foreign ownership and short balance data are not available, and no recent news headlines were provided, so sentiment cannot be assessed.

Closing view

The data shows a steady, low-margin chemicals business with moderate leverage, trading at a P/B of 0.4, below the peers listed here. The very low P/E and very high ROE come from net income that far exceeds operating income, and the cause is not in the data. Free cash flow of ₩270B and the value-up plan filing are points to follow. Until the source of the profit is clear, the headline multiples give an incomplete picture.

Model estimate of fair value

The valuation model has no estimate for this company yet (not enough data, or no positive value with the base case).

Report history

1. Oct 13, 2026InitiationKCC: Thin Operating Margins, Net Income Far Above Operating Profit, Very Low Multiples