KOSPI · 004000 · Chemicals · ₩004000

LOTTE Fine Chemical롯데정밀화학

004000 · KOSPI · ₩004000 · 롯데정밀화학

₩35,400▲ ₩450 (1.29%)End-of-day · Oct 30, 2026 · End-of-day prices.

Trade

Sell Buy

Valuation model · Discounted cash flow (DCF)

We use a 5-year discounted cash flow: the value of the cash the business is expected to produce, in today's money.

Fair value per share

₩82,965

vs the current price (₩35,400)

Enterprise value: ₩1.4T
Equity value: ₩2.1T
WACC: 7.3%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal. This is not financial advice.

Why the model and the price differ

The model is 134% away from today's price. A gap this size usually means the market expects something the past figures don't show yet, or the model leaves something out. What we can see:

To match today's price of ₩35,400, the model needs an operating margin of 2.7% every year (it uses 8.5%).
Margins ranged from 3.0% to 16.4% over the last 5 years, so this is a cyclical business. The model uses the average; the price may be set by where the cycle is now. Try the margin fade option.
49% of the last 12 months' net profit came from outside operations (stakes in other companies, interest, one-offs). The model adds those stakes at book value but doesn't project that income.
Today's P/E is 4.5× against a typical 6.3× over the last 10 years.

Treat the model as a starting point: change the assumptions to the story you believe, and compare with the multiples check below.

Bear / Base / Bull

Bear: ₩58,993; +66.6%
Base: ₩82,965; +134.4%
Bull: ₩125,668; +255.0%

Bear: revenue growth 3 points lower every year, EBIT margin 2 points lower, WACC 1 point higher. Bull: the opposite.

Assumptions

Cycle options

Start from

Preliminary results are the company's early announcement of a quarter's sales and operating profit, before the full report. Including them swaps that quarter in for the same quarter a year earlier.

Margin path

Every year uses the cycle-average margin (8.5%).

Revenue growth

Revenue growth, year 1-10%
How much sales grow that year, compared with the year before.
Default: the last 3 years' revenue growth (-10.7% a year, annual reports), fading to 3% by year 5.
Revenue growth, year 2-6.7%
How much sales grow that year, compared with the year before.
Default: the last 3 years' revenue growth (-10.7% a year, annual reports), fading to 3% by year 5.
Revenue growth, year 3-3.5%
How much sales grow that year, compared with the year before.
Default: the last 3 years' revenue growth (-10.7% a year, annual reports), fading to 3% by year 5.
Revenue growth, year 4-0.2%
How much sales grow that year, compared with the year before.
Default: the last 3 years' revenue growth (-10.7% a year, annual reports), fading to 3% by year 5.
Revenue growth, year 53%
How much sales grow that year, compared with the year before.
Default: the last 3 years' revenue growth (-10.7% a year, annual reports), fading to 3% by year 5.

Business

EBIT margin8.5%
Operating profit as a share of revenue.
Default: through-the-cycle average of the last 12 months and the last 5 annual reports' operating margins.
Tax rate27.5%
Share of operating profit paid as corporate tax.
Default: Korea's top corporate tax rate (25%) plus 10% local income tax.
Depreciation & amortisation8.8%
The non-cash cost of wearing out equipment, added back to cash flow (% of revenue).
Default: not in the statements, so 80% of capital spending (most spending replaces equipment that wears out).
Capital spending11%
Money spent on factories, equipment, software and other long-term assets (% of revenue).
Default: average of the last 3 annual reports (cash flow statements; equipment and intangibles).
Working capital27.1%
Stock and unpaid customer bills, less unpaid supplier bills, as a % of revenue. Each year's extra revenue ties up this much more cash.
Default: working capital (current assets less cash and deposits, minus current liabilities other than borrowings) as a share of revenue, averaged over the last 3 years.

Discount rate

Terminal growth2%
How fast cash flows keep growing every year after year 5.
Default: about Korea's long-run inflation plus real growth.
Risk-free rate4.01%
Yield on Korea's 10-year government bond: the return with almost no risk.
Default: Korea Treasury Bond 10-year yield on 2026-10-30.
Beta0.6
How much the share moves when the market moves: 1 means just like the market.
Default: 105 weeks of weekly returns against KOSPI (official index); raw beta 0.35, adjusted toward 1 and kept between 0.6 and 2.0.
Equity risk premium5.5%
The extra return investors want for owning shares instead of bonds.
Default: a typical premium for Korean shares.
Cost of debt (before tax)5.51%
The interest rate the company would pay to borrow.
Default: the 10-year yield plus a 1.5% credit spread.

Starting point

Revenue (TTM to H1 2026): ₩2T
Net debt (borrowings and leases − cash and deposits): −₩370B
+ Stakes and investments: ₩365B; Associates, long-term financial assets and deposits (book value)
Shares: 25,800,000
Share price: ₩35,400
Market cap: ₩913B

TTM = trailing 12 months: the last four reported quarters added together. "TTM to H1 2026" is the 12 months up to the latest quarterly or half-year report (H1 = to the end of June). Year 1 grows from there.

Past years and projection

Grey columns are reported results from the annual reports (after-tax EBIT at the model's tax rate), so you can check the growth and margin assumptions against the past. Years 1–5 are the model.

	FY2023	FY2024	FY2025	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue	₩1.8T	₩1.7T	₩1.8T	₩1.8T	₩1.7T	₩1.6T	₩1.6T	₩1.6T
Growth	−28.2%	−5.5%	4.9%	−10.0%	−6.7%	−3.5%	−0.2%	3.0%
EBIT	₩155B	₩50B	₩74B	₩151B	₩141B	₩136B	₩136B	₩140B
EBIT margin	8.8%	3.0%	4.2%	8.5%	8.5%	8.5%	8.5%	8.5%
After-tax EBIT	₩112B	₩37B	₩54B	₩110B	₩102B	₩99B	₩99B	₩102B
+ Depreciation	—	—	—	₩157B	₩146B	₩141B	₩141B	₩145B
− Capital spending	₩100B	₩198B	₩272B	₩196B	₩183B	₩176B	₩176B	₩181B
− Working capital	₩254B	−₩181B	−₩19B	−₩54B	−₩32B	−₩16B	−₩869M	₩13B
Free cash flow	—	—	—	₩124B	₩98B	₩79B	₩64B	₩52B
Discount factor	—	—	—	0.932	0.868	0.809	0.754	0.703
Present value	—	—	—	₩116B	₩85B	₩64B	₩48B	₩37B

Terminal value ₩1.5T, worth ₩1.1T today: 75% of enterprise value. It assumes spending settles at 110% of depreciation once growth slows to the terminal rate.

Cross-check: what the market has paid before

For cyclical businesses, analysts check a DCF against the multiples the stock has traded at through past cycles. Price / book is the usual anchor for them: P/E looks highest at the bottom of a cycle, when earnings are smallest, and lowest at the top. The price each band would give today:

	Low	Typical	High
Price / book (book value ₩98,325 a share)Now 0.36×	₩42,1780.43×	₩53,0810.54×	₩91,3810.93×
Price / earnings (last 12 months: ₩7,792 a share)Now 4.54×	₩27,1963.49×	₩48,9926.29×	₩148,34219.0×
P/E on run-rate earnings (preliminary Q3 2026 × 4: ₩4,682 a share)Now 7.56×	₩16,3423.49×	₩29,4386.29×	₩89,13519.0×

Low, typical and high are the 10th percentile, middle and 90th percentile of month-end multiples since 2021, each against the latest report out by then, per share at today's share count; loss years and P/E above 100 are left out. Run-rate earnings are one quarter × 4, not a forecast. Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Sensitivity

Fair value per share as two inputs change; the middle is the current case.

WACC ↓ · Terminal growth →	1.0%	1.5%	2.0%	2.5%	3.0%
6.3%	₩87,248	₩90,814	₩95,193	₩100,706	₩107,865
6.8%	₩82,274	₩85,074	₩88,443	₩92,580	₩97,787
7.3%	₩78,090	₩80,323	₩82,965	₩86,144	₩90,046
7.8%	₩74,523	₩76,327	₩78,431	₩80,920	₩83,914
8.3%	₩71,446	₩72,919	₩74,616	₩76,595	₩78,936

Now (TTM)

Market cap: ₩913B
Enterprise value: ₩544B
P/E: 4.5×
P/B: 0.4×
P/S: 0.5×
EV/EBITDA: —
Dividend yield: 4.2%

Over time (at each year end)

	2025	2024	2023	2022	2021
Price	₩44,550	₩39,350	₩58,000	₩56,700	₩75,000
Market cap	₩1.1T	₩1T	₩1.5T	₩1.5T	₩1.9T
P/E	10.8×	27.9×	8.2×	10.0×	3.3×
P/B	0.5×	0.4×	0.6×	0.6×	0.9×
P/S	0.7×	0.6×	0.8×	0.6×	1.1×
EV/EBITDA	—	—	—	—	—
Dividend yield	3.4%	3.6%	—	—	—

Versus similar companies

Company	P/E	P/B	P/S	EV/EBITDA	Dividend yield
LOTTE Fine Chemical	4.5×	0.4×	0.5×	—	4.2%
LG Chem	—	0.5×	0.3×	—	0.9%
Hanwha Solutions	—	0.5×	0.3×	—	0.0%
Hanwha	5.9×	0.4×	0.1×	—	1.5%
SKC	—	1.8×	1.7×	—	0.0%
KCC	0.9×	0.3×	0.5×	8.9×	0.0%
Kumho Petro Chemical	5.3×	0.4×	0.4×	—	1.6%
Similar companies (median)	5.3×	0.4×	0.4×	8.9×	0.4%

Calculated from end-of-day prices and filed financial statements. Not a recommendation. This is not financial advice.

Also known as: LOTTE Fine Chemical / 롯데정밀화학 / 004000 / KRX:004000

Source: KRX statistical information