Kumho Petro Chemical: Earnings Recovering from a Trough While Shares Trade at 0.5x Book

Thesis

The data supports a picture of earnings recovering from a low base. Trailing operating income of ₩484.4B is well above the ₩271.8B reported for 2025, and the balance sheet is conservative. Trailing P/E is 6 and P/B is 0.5, both low against the 2025 year-end P/E of 11.

What the data does not support is a return to peak profitability. Revenue of ₩7.28T is below the 2021 level of ₩8.46T, and ROE of 7.9% is far below the 38.7% in 2021. Investor flow, foreign ownership and short balance data are not available, so positioning cannot be assessed. Recent filings show capital return steps (share cancellation) and a merger decision, but the data gives no details of the merger terms.

Business overview

Kumho Petro Chemical is a KOSPI-listed chemicals company founded on 1976-12-10 and listed on 1988-01-22. It has 26,459,587 listed shares and a market capitalization of about ₩3.03T. The CEO listed in the data is 백종훈. Revenue has ranged between ₩6.3T and ₩8.5T over 2021 to 2025, while profit has swung widely. The data does not describe product lines or segments.

Financial analysis

All figures come from filed financial statements (DART). Revenue was ₩8.46T in 2021, ₩7.98T in 2022, ₩6.32T in 2023, ₩7.16T in 2024 and ₩6.92T in 2025. Operating income fell from ₩2.41T in 2021 to ₩1.15T in 2022, ₩359.0B in 2023, ₩272.8B in 2024 and ₩271.8B in 2025. Net income followed the same path, from ₩1.97T to ₩290.9B.

Trailing figures as of H1 2026 show revenue of ₩7.28T, operating income of ₩484.4B (6.7% margin), net income of ₩504.9B (6.9% margin) and ROE of 7.9%. Net income slightly exceeds operating income, so non-operating items likely contributed, though the data does not break them down.

The balance sheet is light on debt. Liabilities to equity are 34.4%, cash is ₩652.6B against borrowings of ₩353.2B, and trailing free cash flow is ₩337.1B.

Valuation

Current multiples are P/E 6, P/B 0.5, P/S 0.4 and a dividend yield of 1.4%. Enterprise value is ₩2.74T. EV/EBITDA is not available. At the end of 2025 the P/E was 11 and P/B was 0.5, so the P/E is lower now because trailing earnings have risen while book multiples are unchanged. Earlier year-end multiples are not available.

Among listed peers, P/B is 0.5 for LG Chem, 0.6 for Hanwha and Hanwha Solutions, 0.4 for KCC and 1.8 for SKC. Peer P/E is 10.3 for Hanwha and 1.1 for KCC; it is not available for the others. Kumho's P/B is therefore in line with most of the group.

Catalysts

• The share cancellation decision and treasury share trust termination filings (2026-09-15 and 2026-09-29) relate to shareholder returns.
• A merger decision was filed on 2026-08-10 and amended on 2026-08-12, but the data gives no terms.
• The H1 2026 half-year report filed on 2026-08-14 showed trailing operating margin at 6.7%.
• A change in the largest shareholder's holdings was filed on 2026-09-03.
• IR events were held on 2026-08-07 and 2026-09-08, and a 2026-10-13 news item discusses R&D and eco-friendly products.

Risks

• Earnings remain far below 2021 and 2022 levels, and the history shows how quickly margins can compress.
• Revenue has been flat to lower, at ₩6.9T in 2025 versus ₩8.5T in 2021, so the recovery rests on margins rather than growth.
• The shares fell 8.2% over one month and sit near the lower half of the 52-week range of ₩104,500 to ₩162,300.
• Investor flow, foreign ownership and short interest data are unavailable, which limits visibility on market positioning.
• The merger decision carries uncertainty because its terms and impact are not in the data.

Closing view

The data shows a company with a strong balance sheet, improving trailing profits and low multiples against book value, alongside returns and margins well below earlier peaks. Capital return filings and a merger decision add items to monitor, but missing flow data and merger details limit the picture. The evidence is mixed and depends on whether the recent margin improvement continues.

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, 2026InitiationKumho Petro Chemical: Earnings Recovering from a Trough While Shares Trade at 0.5x Book