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LG Chem

051910 · KOSPI · ₩LGC · LG화학

₩235,000▲ ₩1,000 (0.43%)End-of-day · Oct 30, 2026 · End-of-day prices.
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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

With these assumptions the model gives no positive value.

Enterprise value
−₩4.2T
Equity value
−₩47T
WACC
5.8%

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 gives no positive value at these assumptions. What we can see:

  • To match today's price of ₩235,000, the model needs an operating margin of 11.4% every year (it uses 3.7%).
  • Margins ranged from 1.9% to 11.8% 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.
  • In the projection, spending on equipment, software and working capital takes most or all of the after-tax operating profit, so free cash flow is thin. Companies that invest heavily often look like this until spending slows.

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
—
Base
—
Bull
—

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

Assumptions

Sign in to change the assumptions and see the results update. Sign in

Cycle options

Margin path

Every year uses the cycle-average margin (3.7%).

Revenue growth

  • -4%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-4% a year, annual reports), fading to 3% by year 5.

  • -2.2%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-4% a year, annual reports), fading to 3% by year 5.

  • -0.5%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-4% a year, annual reports), fading to 3% by year 5.

  • 1.3%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-4% a year, annual reports), fading to 3% by year 5.

  • 3%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-4% a year, annual reports), fading to 3% by year 5.

Business

  • 3.7%

    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.

  • 27.5%

    Share of operating profit paid as corporate tax.

    Default: Korea's top corporate tax rate (25%) plus 10% local income tax.

  • 22.4%

    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).

  • 28%

    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).

  • 15.5%

    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

  • 2%

    How fast cash flows keep growing every year after year 5.

    Default: about Korea's long-run inflation plus real growth.

  • 4.01%

    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.

  • 0.88

    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 0.83, adjusted toward 1 and kept between 0.6 and 2.0.

  • 5.5%

    The extra return investors want for owning shares instead of bonds.

    Default: a typical premium for Korean shares.

  • 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)
₩49T
Net debt (borrowings and leases − cash and deposits)
₩29T
+ Stakes and investments
₩356B
Associates, long-term financial assets and deposits (book value)
− Minority interests
₩13T
Shares
78,275,100
incl. 7,682,759 preferred
Share price
₩235,000
Market cap
₩17T

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.

FY2023FY2024FY2025Year 1Year 2Year 3Year 4Year 5
Revenue₩55T₩49T₩46T₩47T₩46T₩46T₩46T₩48T
Growth6.5%−11.5%−6.1%−4.0%−2.2%−0.5%1.3%3.0%
EBIT₩2.5T₩917B₩1.2T₩1.7T₩1.7T₩1.7T₩1.7T₩1.8T
EBIT margin4.6%1.9%2.6%3.7%3.7%3.7%3.7%3.7%
After-tax EBIT₩1.8T₩665B₩856B₩1.3T₩1.2T₩1.2T₩1.2T₩1.3T
+ Depreciation———₩10T₩10T₩10T₩10T₩11T
− Capital spending₩13T₩15T₩14T₩13T₩13T₩13T₩13T₩13T
− Working capital₩3.7T−₩2T₩1.7T−₩303B−₩160B−₩36B₩92B₩215B
Free cash flow———−₩1.1T−₩1.2T−₩1.3T−₩1.4T−₩1.6T
Discount factor———0.9450.8930.8440.7980.754
Present value———−₩1T−₩1.1T−₩1.1T−₩1.1T−₩1.2T

Terminal value ₩1.7T, worth ₩1.3T today: -30% 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:

LowTypicalHigh
Price / book (book value ₩452,637 a share)Now 0.52×₩256,6960.57×₩457,1421.01×₩847,6291.87×
P/E on run-rate earnings (Q2 2026 × 4: ₩5,798 a share)Now 40.5×₩79,54713.7×₩122,71421.2×₩172,20829.7×

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%
4.8%—————
5.3%—————
5.8%—————
6.3%—————
6.8%—————

Now (TTM)

Market cap
₩17T
Enterprise value
₩46T
P/E
—
P/B
0.5×
P/S
0.3×
EV/EBITDA
—
Dividend yield
0.9%

Over time (at each year end)

20252024202320222021
Price₩333,000₩250,000₩499,000₩600,000₩615,000
Market cap₩24T₩18T₩35T₩42T₩43T
P/E——26.3×23.0×11.8×
P/B0.7×0.5×1.1×1.3×2.0×
P/S0.5×0.4×0.6×0.8×1.0×
EV/EBITDA—————
Dividend yield0.6%0.4%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
LG Chem—0.5×0.3×—0.9%
Hanwha Solutions—0.5×0.3×—0.0%
Hanwha5.9×0.4×0.1×—1.5%
SKC—1.8×1.7×—0.0%
KCC0.9×0.3×0.5×8.9×0.0%
Kumho Petro Chemical5.3×0.4×0.4×—1.6%
Soulbrain18.3×2.0×2.2×—0.8%
Similar companies (median)5.6×0.5×0.4×8.9×0.4%

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

Also known as: LG Chem / LG화학 / 051910 / KRX:051910

Source: KRX statistical information