Lotte Energy Materials: Share Price Rebounds Sharply While Losses Persist

Thesis

The data supports a strong price recovery: the shares gained 29.4% in one month, 61.3% in three months and 144.3% in one year, and sit between a 52-week low of ₩21,600 and a high of ₩83,100. The current price is about 34.3% below that high.

The filed numbers do not show a matching improvement. Trailing twelve-month (TTM) operating income to H1 2026 was a loss of ₩90.0B and net income a loss of ₩81.5B. Free cash flow was negative ₩189.8B.

On the supportive side, the balance sheet looks modest in leverage, with liabilities at 31.5% of equity and borrowings of ₩56.3B against cash of ₩125.5B. Investor flow, foreign ownership, short balance and news data are not available, so the reasons behind the rally cannot be read from this dataset.

Business overview

The company is listed on KOSPI in the electronic components sector. It was founded on 1987-08-11 and listed on 2011-03-04, with 52,365,463 listed shares. Its CEO is listed as 김연섭.

Revenue was ₩688.9B in 2021 and rose to ₩902.3B in 2024, then fell 24.9% to ₩677.5B in 2025. TTM revenue to H1 2026 was ₩668.7B, a similar level to 2021. Operating margin went from 10.2% in 2021 to 11.6% in 2022, then declined to 1.5% in 2023, negative 7.1% in 2024 and negative 21.4% in 2025.

Financial analysis

All figures below come from filed financial statements (DART).

Annual operating income moved from a profit of ₩69.9B in 2021 and ₩84.8B in 2022 to ₩11.8B in 2023, then to losses of ₩64.4B in 2024 and ₩145.2B in 2025. Net income was ₩62.8B in 2021, ₩43.8B in 2022, a loss of ₩32.5B in 2023, a small profit of ₩6.3B in 2024 and a loss of ₩157.5B in 2025.

TTM to H1 2026 shows revenue of ₩668.7B, an operating margin of negative 13.5%, a net margin of negative 12.2% and ROE of negative 5.3%. That is a smaller loss than 2025 on the operating margin (negative 21.4%), though it is still a loss. ROE was negative 10.5% in 2025.

Cash was ₩125.5B and borrowings ₩56.3B at H1 2026. TTM free cash flow was negative ₩189.8B, which is a cash drain larger than the net loss.

Valuation

With losses, P/E and EV/EBITDA are not meaningful and are not available. Price-to-book is 1.7, up from 1.0 at the end of 2025. Price-to-sales is 4.3 and enterprise value is about ₩2.8T. The dividend yield is 0.0%.

The listed peers all have positive P/Es: Samsung Electro-Mechanics at 110.2, Doosan 54.9, Hanwha Systems 80.8, LG Innotek 17.1 and Isupetasys 44.2. Their P/B ratios range from 1.8 (LG Innotek) to 10.9 (Samsung Electro-Mechanics). Lotte Energy Materials' 1.7 P/B is below all of them, but the peers are profitable and much larger in several cases, so the comparison is limited. Earlier-year P/E history is not available.

Catalysts

• The H1 2026 half-year report and preliminary earnings were filed in August 2026, and later results will show whether the TTM losses are narrowing.
• Several investor relations (IR) events were filed between 2026-08-21 and 2026-08-28, indicating active communication with the market.
• Amended filings on a sale of shares in another company (2026-08-20 and 2026-09-03) point to portfolio changes that could affect cash or earnings, though amounts are not in the data.
• A change in the largest shareholder's holdings was filed on 2026-08-03, which may matter for ownership structure.
• An amended debt guarantee decision for another party was filed on 2026-08-12, with terms not given in the data.

Risks

• Operating and net losses have continued since 2024, with TTM operating margin at negative 13.5%.
• Free cash flow was negative ₩189.8B over the TTM, which could erode the ₩125.5B cash balance if it continues.
• The share price rose 144.3% in a year while earnings remained negative, so valuation depends on factors not visible in the filed numbers.
• Revenue fell 24.9% in 2025 and remains below its 2024 level of ₩902.3B.
• Investor flow, foreign ownership, short interest and news data are unavailable, limiting insight into who is driving price moves.

Closing view

The data shows a sharp share price recovery alongside weak fundamentals. Revenue is flat to lower versus 2021, margins have turned negative, and cash flow is negative, though the balance sheet carries limited debt. Price-to-book of 1.7 is low relative to profitable peers, but the company's losses make earnings-based comparisons impossible. Whether the recent price strength reflects an expected recovery cannot be determined from the data, and upcoming filings will be the main way to see if the loss trend is changing.

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 Energy Materials: Share Price Rebounds Sharply While Losses Persist