LG Chem: Loss-Making Trailing Year, Sub-1x Book Value, and Heavy Cash Burn

Thesis

The data shows a company whose scale is large but whose profitability has fallen sharply since 2021. Operating margin went from 11.8% in 2021 to 1.7% on a trailing basis, and net income has been negative since 2024. A price-to-book of 0.5x and a dividend yield of 3.5% point to a market valuing the company well below its accounting equity. The data does not show what is driving the losses or whether they will reverse. Free cash flow of -₩19.2T against cash of ₩11.1T and borrowings of ₩28.7T makes funding a key issue to watch. Share price returns are mixed: -4.6% over one month, 0.0% over three months and -6.6% over one year. A recent amended filing on a production suspension, and an exchange inquiry about a news report in August, add uncertainty, but the data gives no details on either.

Business overview

LG Chem is a KOSPI-listed chemicals company, founded on 2001-04-01 and listed on 2001-04-25, with 70,592,343 listed shares. CEO is 김동춘. Market capitalisation is about ₩18.4T and enterprise value about ₩36.0T. Revenue rose from ₩42.7T in 2021 to ₩51.9T in 2022 (+21.6%) and ₩55.2T in 2023 (+6.5%). It then fell to ₩48.9T in 2024 (-11.5%) and ₩45.9T in 2025 (-6.1%). The trailing figure of ₩48.8T as of H1 2026 suggests a partial recovery in sales. The data does not break revenue down by business segment.

Financial analysis

All figures come from filed financial statements (DART). Operating income fell from ₩5.0T in 2021 to ₩3.0T in 2022, ₩2.5T in 2023, ₩917B in 2024 and ₩1.2T in 2025. Trailing operating income is ₩816B, a 1.7% margin. Net income went from ₩3.7T in 2021 to ₩1.8T in 2022 and ₩1.3T in 2023, then to losses of ₩691B in 2024 and ₩1.8T in 2025. Trailing net loss is ₩1.5T (-3.1% margin). Return on equity moved from 16.9% in 2021 to -5.5% in 2025 and -4.4% trailing. Liabilities to equity stand at 129.6%. Cash is ₩11.1T versus borrowings of ₩28.7T. Trailing free cash flow is -₩19.2T.

Valuation

Price-to-book is 0.5x now, versus 0.7x at the end of 2025. Price-to-sales is 0.4x and the dividend yield is 3.5%. Price-to-earnings and EV/EBITDA are not available because earnings are negative or the data is missing. Year-end P/E history is unavailable, and year-end P/B is given only for 2025. The listed peers (Hanwha, Hanwha Solutions, KCC, SKC, Soulbrain) have market caps of ₩3.1T to ₩8.2T, but no P/E or P/B data is provided for them, so a peer multiple comparison is not possible.

Catalysts

• An amended Production Suspension filing was posted on 2026-10-08, and its details are not in the data.
• The H1 2026 half-year report filed on 2026-08-14 provided the latest financial figures and may shape sentiment.
• Investor relations events on 2026-08-13 and 2026-09-04 show ongoing communication with investors.
• Recent news on 2026-10-13 covers new packaging film products shown at TOKYO PACK, though the data gives no financial impact.
• An insider shareholding report on 2026-09-29 and a 5%+ holding report on 2026-08-07 reflect ownership activity.

Risks

• Net losses in 2024, 2025 and the trailing period show earnings have not yet recovered.
• Free cash flow of -₩19.2T could keep pressure on the balance sheet, which carries ₩28.7T of borrowings.
• Operating margin of 1.7% leaves little cushion if revenue weakens again.
• The production suspension filing and the August exchange inquiry about a news report or price move signal event risk with unclear details.
• Investor flow, foreign ownership and short interest data are not available, so positioning cannot be assessed.

Closing view

The data shows a large chemicals company with falling margins, three consecutive periods of net losses and heavy cash outflows, set against a 0.5x price-to-book multiple and a 3.5% dividend yield. The low book multiple reflects the weak earnings and cash flow rather than a clear signal on its own. Missing peer multiples, flow data and details on the production suspension limit the conclusions that can be drawn. Future filings will be the main way to see whether profitability and cash flow stabilise.

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, 2026InitiationLG Chem: Loss-Making Trailing Year, Sub-1x Book Value, and Heavy Cash Burn