Lotte Chemical: Continued Losses and Sub-Book Valuation Alongside Active Guarantee and Investment Filings

Thesis

The data supports a picture of a large chemicals company under sustained earnings pressure. Operating income has been negative every year since 2022, and net losses widened to ₩2.0T in 2025. Trailing results to H1 2026 show an operating loss of ₩382.4B and a net loss of ₩1.2T, so the pace of loss has eased slightly from 2025 on an operating basis, but the data does not show a return to profit.

On the other side, the market value of ₩2.5T is far below the scale of annual revenue (₩20.2T trailing), and the price-to-book ratio is 0.2x. That reflects how heavily the market is discounting current losses. The data does not include guidance, investor flow, foreign ownership, short balance or news headlines, so we cannot say who is buying or selling or what drives sentiment.

Recent filings show guarantees of debt for other parties, a share acquisition, a facility investment disclosure and a related-party transaction. The data gives no amounts or details here, so their financial impact is not available.

Business overview

Lotte Chemical is listed on KOSPI in the Chemicals sector. It was founded on 1976-03-16 and listed on 1991-05-30. It has 42,775,419 listed shares and a market capitalisation of about ₩2.5T. Its listed leadership is 신동빈, 이영준 and 주우현.

Revenue has been in a range of ₩18.1T to ₩22.3T over 2021 to 2025. It was ₩18.1T in 2021, peaked at ₩22.3T in 2022 (up 22.9%), then fell to ₩19.9T in 2023, rose to ₩20.4T in 2024 and fell 9.5% to ₩18.5T in 2025. Trailing revenue to H1 2026 is ₩20.2T.

Financial analysis

These figures come from filed financial statements (DART). 2021 was the last profitable year, with operating income of ₩1.5T (8.5% margin), net income of ₩1.4T and ROE of 9.9%. Since then operating margins have been negative: -3.4% in 2022, -1.7% in 2023, -4.4% in 2024 and -5.1% in 2025.

Net income was roughly flat in 2022 (₩27.8B) and slightly negative in 2023 (-₩50.0B), then deteriorated to -₩1.7T in 2024 and -₩2.0T in 2025. ROE was -11.4% in 2024 and -15.1% in 2025.

Trailing to H1 2026: revenue ₩20.2T, operating income -₩382.4B (-1.9% margin), net income -₩1.2T (-5.8% margin) and ROE -8.5%. Free cash flow is -₩1.7T. Cash is ₩1.4T against borrowings of ₩5.4T, and liabilities-to-equity is 76.8%.

Valuation

Price-to-earnings and EV/EBITDA are not meaningful or not available because earnings are negative. Price-to-book is 0.2x (also 0.2x at end of 2025) and price-to-sales is 0.1x. Dividend yield is shown at 2.6%, although the loss-making record means the data does not show how it is funded. Enterprise value is ₩6.4T, well above market cap because of net debt.

Among listed peers in the data, price-to-book is 0.5x for LG Chem, 0.6x for Hanwha, 0.6x for Hanwha Solutions, 0.4x for KCC and 1.8x for SKC. Lotte Chemical is below all of them on this measure. Only Hanwha (10.3x) and KCC (1.1x) have a meaningful P/E. No historical multiple range for Lotte Chemical beyond the 2025 year-end P/B is available.

Catalysts

• The 2026-09-17 filings on a share acquisition, new facility investment (voluntary disclosure) and a related-party transaction may show how the company is allocating capital, though amounts are not in the data.
• Several debt guarantee decisions for third parties were filed or amended between 2026-09-01 and 2026-09-30, and further detail could affect views of balance sheet exposure.
• Repeated responses to rumour or news reports (2026-08-21, 2026-08-24, 2026-09-30) suggest market-moving speculation, but the content is not in the data.
• A dividend record-date decision was filed on 2026-08-20, which is relevant given the 2.6% dividend yield.
• The next financial statements will show whether the easing of operating losses in the trailing figures versus 2025 continues.

Risks

• Operating losses in every year from 2022 to 2025 and in the trailing period show that profitability has not recovered.
• Free cash flow of -₩1.7T alongside ₩5.4T of borrowings against ₩1.4T of cash increases reliance on financing.
• Debt guarantees for other parties and related-party transactions could add contingent obligations, and the data gives no amounts.
• The shares fell 11.8% over one month and 11.6% over one year and trade close to the 52-week low, indicating weak market sentiment.
• Investor flow, foreign ownership and short balance data are not available, so positioning risks cannot be assessed.

Closing view

The filed numbers show a company with large revenue but persistent losses, negative free cash flow and sizeable borrowings, and the market prices it at 0.2x book, below the peers shown. The discount is consistent with the earnings record, while the narrowing of the trailing operating loss compared with 2025 is a modest point in the other direction. Missing data on flows, guidance, news and the size of recent guarantees and investments limits how far conclusions can go, so the evidence is best read as showing stress that has not yet reversed rather than a settled outcome.

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, 2026InitiationLotte Chemical: Continued Losses and Sub-Book Valuation Alongside Active Guarantee and Investment Filings