KOSPIChemicals002380

KCC

₩471,500▼ 0.21%2026-10-02 close

Market Cap

₩4.1T

Turnover

₩4.9B

Volume

10,000 shares

Shares out.

8.6M

PER

1.1×

PBR

0.3×

EPS

₩425,618

Dividend Yield

3.11%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩15,000 per share · Prices as of the 2026-10-02 close

Report overview

Silicone Recovery Meets Asset-Backed Payouts

KCC is simultaneously showing a quarterly profit recovery in silicones and formalizing an asset-backed shareholder return scheme tied to its Samsung C&T stake, making it more important than ever to separate operating profit from financial-asset valuation gains.

1
Second-quarter 2026 revenue was KRW 1.789tn with operating profit of KRW 134.4bn, up roughly 52% from KRW 88.1bn in the prior quarter and marking a second straight quarter of recovery from the KRW 66.5bn trough in Q4 2025.
2
The swing factor is silicones, the largest revenue segment: press reports put Q2 2026 silicone operating profit at KRW 37.3bn versus KRW 2.6bn in Q1, attributed to price increases and a richer high-value product mix.
3
Owner-attributable net profit of KRW 2.839tn in Q2 2026 largely reflects valuation gains on financial holdings rather than the core business, so earnings quality must be read separately.
4
The August 2026 value-up plan added a special dividend funded by at least 50% of special dividends received from Samsung C&T, while 1,174,300 treasury shares are to be cancelled in tranches through September 2027.
5
Equity rose to KRW 7.824tn at end-2025 from KRW 5.039tn a year earlier and the debt-to-equity ratio fell from 160.1% to 114.8%, though much of that shift is also linked to asset revaluation.

Business structure

KCC began as a building materials company founded in 1958, took its current name after absorbing Korea Chemical in 2000, and now runs three divisions: building materials, paints and silicones.

In silicones it operates what is described as Korea's only fully integrated chain from raw materials to secondary products, and its 2019 acquisition of US-based Momentive Performance Materials lifted it into the top tier of global silicone suppliers.

Press reporting notes it bought a 45.49% stake in May 2019 and completed the purchase of the remaining interest in May 2025 (Insight Korea, November 2025).

Silicones is the largest business: one report citing the Q1 2026 filing put it at about 49% of total revenue, while in Q3 2025 the split was silicones KRW 705.4bn (43.5%), paints KRW 497.2bn (30.6%) and building materials KRW 253.7bn (15.6%).

Paints leans on autos and shipbuilding demand to hold its revenue line, while building materials is seeing rising insulation supply into data centers and high-tech facilities and other large commercial and industrial construction sites.

Within silicones the company is expanding relatively higher-value lines such as electronics materials, personal care and healthcare, and it has also moved into silicone-based cosmetic ingredients.

On the power semiconductor side, it showcased an integrated package of ceramic substrates, epoxy molding compound and thermally conductive silicones at the PCIM exhibition in Germany in June 2026, saying it would broaden applications from electric vehicles to AI data centers.

Competition in silicones is framed by global players such as Shin-Etsu Chemical, Elkem and Dow alongside Chinese producers.

Separately, KCC is the second-largest shareholder of Samsung C&T with a 10.49% stake, so a large listed equity holding directly shapes its financial statements and payout policy independent of the core business.

Earnings trend

Quarterly revenue · Operating profit

₩1.7T₩140.4B25Q2₩1.6T₩117.3B25Q3₩1.6T₩66.5B25Q4₩1.6T₩88.1B26Q1₩1.8T₩134.4B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩6.8T₩467.7B2022₩6.3T₩312.5B2023₩6.7T₩471.1B2024₩6.5T₩427.6B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.7T	₩140.4B	8.2%
2025Q3	₩1.6T	₩117.3B	7.2%
2025Q4	₩1.6T	₩66.5B	4.3%
2026Q1	₩1.6T	₩88.1B	5.4%
2026Q2	₩1.8T	₩134.4B	7.5%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩6.8T	₩467.7B	₩33.9B	6.9%	0.7%	136.3%
2023	₩6.3T	₩312.5B	₩212.7B	5.0%	4.1%	145.1%
2024	₩6.7T	₩471.1B	₩310.6B	7.1%	6.2%	160.1%
2025	₩6.5T	₩427.6B	₩1.5T	6.6%	19.7%	114.8%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On an annual basis, 2025 revenue of KRW 6.484tn was down 2.6% from KRW 6.659tn in 2024, while operating profit of KRW 427.6bn fell 9.2% from KRW 471.1bn, taking the operating margin from 7.1% to 6.6%.

Owner-attributable net profit, however, jumped from KRW 310.6bn in 2024 to KRW 1.538tn in 2025, a move far out of proportion to the core earnings trend and therefore heavily driven by non-operating factors.

Set against 2022 (operating profit KRW 467.7bn, net profit KRW 33.9bn) and 2023 (KRW 312.5bn and KRW 212.7bn), operating profit has oscillated within a rough KRW 300-500bn band while net profit has been far more volatile.

The balance sheet showed equity of KRW 7.824tn against liabilities of KRW 8.979tn at end-2025 for a debt-to-equity ratio of 114.8%, improved from 160.1% in 2024 and 145.1% in 2023, while operating cash flow rose to KRW 789.5bn in 2025 from KRW 596.8bn.

Quarterly, operating profit slid from KRW 140.4bn in Q2 2025 to KRW 117.3bn in Q3 and KRW 66.5bn in Q4, then recovered to KRW 88.1bn in Q1 2026 and KRW 134.4bn in Q2 2026.

Q2 2026 revenue of KRW 1.789tn was the largest of the last five quarters and up 4.9% from KRW 1.705tn a year earlier, though operating profit was slightly lower year on year.

The company said paint profitability was hurt by higher raw material prices linked to disruption in the Strait of Hormuz, but that improvement in building materials on greater high-tech volumes and in silicones on expanded high-value product sales cushioned the decline.

Press reporting put Q2 2026 divisional operating profit at KRW 37.3bn for silicones, KRW 37.9bn for building materials and KRW 48.5bn for paints, with all three profitable at once (Saturday Economy, September 1, 2026).

By contrast, owner-attributable net profit of KRW 2.839tn in Q2 2026 mainly reflected valuation gains on holdings such as Samsung C&T and HD Korea Shipbuilding & Offshore Engineering, and commentators cautioned that this should not be read as improved operating competitiveness.

Industry analysis

The silicone cycle is described as being in a supply-side adjustment phase. The company and local media say production cuts by Chinese producers and restructuring at global peers are gradually easing the oversupply burden in organosilicones.

In an August 2025 note, Hana Securities argued that Chinese DMC utilization had fallen to 65.5% in 2024 but would recover to about 74% in 2025 and 87% in 2026 as new capacity additions were curtailed, citing China's organosilicone industry consolidation guidelines and overseas siloxane plant closures as supportive factors.

Kiwoom Securities said in a November 2025 report that China's silicone rationalization plan announced in July would continue into 2026. Evidence in the other direction also exists.

In Q3 2025 the silicone price correction ran longer than expected and aggressive Chinese supply pressured profitability, and in Q1 2026 intensifying Chinese price competition was again flagged as a drag on margins.

In building materials, weak housing starts contrast with non-residential demand from semiconductor clusters, data centers and public housing that is supporting insulation volumes.

In paints, a strong shipbuilding cycle, eco-friendly vessel demand and auto exports underpin the earnings base, while raw material prices and geopolitics drive the margin.

The net result is a company exposed at the same time to three distinct cycles: silicones, domestic non-residential construction investment, and shipbuilding and autos.

Outlook

Management says it will keep expanding high-value product projects and the related pipeline while optimizing plant utilization in the second half.

In building materials it sees room for further improvement in insulation volumes if demand continues from the large semiconductor clusters announced under the three mega-projects, plus data centers and public housing, yet it framed its second-half view conservatively given the pace of housing recovery and raw material costs.

In silicones the stated approach is flexible pricing tuned to market conditions plus mix management centered on higher-value products.

Brokerage estimates are also public: according to August 2026 reporting, Hana Securities projected third-quarter silicone operating profit of about KRW 42.3bn and Samsung Securities projected KRW 32.0bn.

On shareholder returns, the value-up plan disclosed on August 20, 2026 added a special dividend linked to special dividends from Samsung C&T on top of the existing minimum dividend per share and performance-linked add-on, with the specific payout ratio to be set by future board resolution.

Of its treasury stock, 13.2% or 1,174,300 shares excluding a 4% slice reserved for employee compensation is to be cancelled in four tranches through September 2027, with the first tranche of 293,575 shares completed in April 2026.

The company set medium-term targets of a price-to-book ratio above 1.0 times and a 10% operating margin by 2030.

That said, the size of any special dividend depends on two external steps, Samsung Electronics' special dividend decision and Samsung C&T's payout ratio, so the amount cannot be pinned down until it is confirmed.

Valuation

PER

1.1×

PBR

0.3×

ROE

40.4%

EPS

₩425,618

BPS

₩1,498,030

Dividend per share

₩15,000

The first thing to separate in any valuation discussion is the nature of the earnings.

Net profit over the last four quarters includes large valuation gains on financial assets such as the Samsung C&T stake, which makes earnings-based multiples screen unusually low - not because core profit surged, but because accounting revaluation flowed through the income statement.

On an asset basis the shares trade well below book value per share, and the frequently cited backdrop is that as of end-June 2026 the Samsung C&T stake was worth roughly KRW 7.969tn and total financial assets including HD Korea Shipbuilding & Offshore Engineering were valued at KRW 9.083tn, above the company's own market capitalization.

The dividend framework has changed from a minimum dividend plus performance-linked add-on to that structure plus a special dividend, and Hana Securities argued in August 2026 that KCC's dividend yield could rise substantially depending on how far Samsung Electronics and Samsung C&T expand their payouts.

On target prices, Hana Securities set KRW 730,000 in an August 21, 2026 report and Samsung Securities maintained KRW 650,000 in a report the same day.

Balanced against that, narrowing an asset-based discount would require both a confirmed special dividend payout ratio and visible improvement in the core operating margin, while a correction in Samsung C&T shares would simultaneously pressure book value and net profit.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Quarterly profit recovery in silicones

Reports indicate the silicone business, which posted an operating loss in Q4 2025, turned profitable in Q1 2026 and then expanded that profit in Q2.

The company said higher volumes lifted plant utilization and eased fixed-cost pressure, while stronger demand in higher-value lines such as electronics materials, personal care and healthcare drove margin gains beyond top-line growth.

Because silicones is the largest revenue segment, room for margin improvement there feeds directly into the group operating margin. Brokerages have also published estimates assuming the recovery extends into the third quarter.

Policy that channels holdings into shareholder returns

In August 2026 KCC created a policy to use at least 50% of any special dividend received from Samsung C&T as a source for its own special dividend, and formalized a commitment to return part of the proceeds if investment-purpose financial assets are sold at an appropriate time.

It also said residual funds after dividends would go toward debt repayment and balance-sheet improvement. The staged cancellation of 13.2% of shares held in treasury saw its first tranche completed in April 2026, with full cancellation slated by September 2027. What is new is that the pathway from non-operating asset cash flows to shareholder returns is now written down.

Three-division diversification and non-residential demand

Management says a portfolio in which building materials, paints and silicones serve different end markets acted as a buffer against external shifts. In Q2 2026 that showed up as gains in silicones and building materials offsetting cost pressure in paints.

Building materials was supported by rising supply into large commercial sites such as data centers and high-tech facilities despite weak housing starts, and the company sees semiconductor clusters, data centers and public housing as key second-half drivers.

Because insulation had carried fixed-cost burdens from capacity additions, higher industrial volumes leave room for utilization to improve.

Bear factors

Much of net profit is valuation gains

Owner-attributable net profit of KRW 2.839tn in Q2 2026 largely reflected valuation gains on holdings such as Samsung C&T and HD Korea Shipbuilding & Offshore Engineering, and commentators warned this should not be read as improved operating competitiveness.

Operating profit in the same quarter was KRW 134.4bn, leaving a very wide gap between core scale and net profit. Valuation gains are accounting items rather than cash inflows, so a reversal in share prices can produce losses in the opposite direction.

Feeding such net profit straight into multiple calculations therefore produces figures detached from the underlying business.

Paint input costs and geopolitics

The company said paint profitability deteriorated on higher raw material prices tied to concerns over disruption in the Strait of Hormuz, a factor cited alongside the construction downturn as a main cause of weak first-half 2026 results.

Based on press figures, paints delivered the largest divisional operating profit in Q2 2026, so input-cost swings carry meaningful group impact. Management says improved purchasing terms and supplier diversification are cushioning the decline, but oil and utility costs remain second-half variables. If raw material prices rise again, gains in silicones could be offset.

Dependence on the silicone cycle and Chinese policy

The current improvement thesis rests heavily on easing oversupply from Chinese production cuts and restructuring among global peers.

Yet in Q3 2025 the silicone price correction lasted longer than expected and aggressive Chinese supply hurt profitability, and in Q1 2026 intensifying Chinese price competition was again flagged as a margin drag. In other words, slower policy implementation or softer demand could reverse the improvement. A large share of the drivers in this segment sits outside the company's control.

Risk factors

Financial leverage

Liabilities of KRW 8.979tn at end-2025 exceeded equity of KRW 7.824tn, for a debt-to-equity ratio of 114.8%. That is down from 160.1% in 2024 and 145.1% in 2023, but because the equity build is intertwined with asset revaluation, the ratio can retrace if asset values correct.

The company has said residual funds after dividends will go toward debt repayment, yet the actual pace of reduction needs to be verified. The rate environment and borrowing structure remain items to monitor.

Holding-linked volatility and governance

Because changes in the value of the 10.49% Samsung C&T stake flow directly into net profit and equity, that share price is a core driver of KCC's reported volatility. The funding for any special dividend must also pass through two steps: Samsung Electronics' special dividend decision and Samsung C&T's payout ratio.

As seen when Trustone Asset Management filed an advisory shareholder proposal urging monetization of the Samsung C&T stake ahead of the early-2026 annual meeting and then withdrew it after the company announced its return policy, outside pressure over how the assets are used may recur. The timing, method and tax implications of any monetization remain unspecified.

Construction and housing end demand

Building materials has been filling demand with non-residential volumes such as data centers and high-tech facilities while housing remains weak. The company itself said it takes a conservative second-half view given the pace of housing recovery and raw material prices.

Non-residential projects are individually large with volatile schedules, so delays in groundbreaking or order timing would affect insulation utilization and fixed-cost absorption. Architectural paint demand is likewise directly tied to the construction cycle.

What to watch next

Late October to early November 2026
Q3 2026 results. Whether silicone operating profit holds at or above the Q2 level (KRW 37.3bn per press reports) and whether paint input-cost pressure eases will set the direction of the group operating margin. The gap versus published estimates such as Hana Securities' KRW 42.3bn and Samsung Securities' KRW 32.0bn is also worth checking.
Fourth quarter of 2026
Execution of Samsung Electronics' shareholder return funds and Samsung C&T's dividend decision. KCC's special dividend is calculated on the portion of Samsung C&T's dividend per share above KRW 2,500, and the detailed payout ratio is to be fixed by board resolution, so the timing and content of that resolution matter.
Q4 2026 through September 2027
Progress of the staged treasury share cancellation. The plan covers 1,174,300 shares excluding the employee-compensation portion across four tranches, with the first completed in April 2026; the timing and size of subsequent cancellation filings will determine changes in share count.
February to March 2027
Full-year 2026 results, the dividend resolution and the annual general meeting. This is the first cycle in which the special dividend is fixed as an actual amount, and it also allows a check on annual progress toward the company's 10% operating margin target for 2030.
Ongoing from the second half of 2026
Implementation of China's organosilicone rationalization and restructuring measures alongside siloxane and DMC price indicators, plus news flow on insulation and power semiconductor material orders tied to semiconductor clusters and data centers. Whether supply adjustment translates into realized selling prices will determine how durable the silicone margin recovery is.

Overall view

For KCC, 2026 is a year in which two different stories sit inside the same financial statements.

In the core business, 2025 revenue of KRW 6.484tn and operating profit of KRW 427.6bn (a 6.6% margin) marked a decline from the prior year, yet quarterly operating profit has retraced from a KRW 66.5bn trough in Q4 2025 to KRW 88.1bn in Q1 2026 and KRW 134.4bn in Q2 2026.

The center of that recovery is silicones, the largest revenue segment, with the company and local media citing pass-through of price increases, a richer high-value mix and easing fixed-cost pressure on higher utilization.

By contrast, owner-attributable net profit of KRW 2.839tn in Q2 2026 was heavily driven by valuation gains on holdings such as Samsung C&T, so the scale of earnings and the quality of earnings must be read separately.

On the policy side, the newly created special dividend funded by at least 50% of special dividends received from Samsung C&T, the staged cancellation of 13.2% of treasury shares and the formalized intent to monetize financial assets have made the route from asset value to shareholder returns more concrete than before.

Weighing equally on the other side are paint input-cost and geopolitical pressure, weak housing starts, dependence on Chinese policy and the silicone cycle, and net profit and equity volatility tied to the price of listed holdings.

The next checkpoints are therefore whether the silicone margin holds in third-quarter results and how the board fixes the actual special dividend payout ratio. This report is for information purposes only and does not contain any buy or sell recommendation on any security.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.