PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close
Isu Chemical posted record quarterly operating profit in both the first and second quarters of 2026, entering a phase of rapid profitability recovery in its core petrochemical business.
Second-quarter 2026 operating profit reached KRW 96.6 billion, a quarterly record, expanding sharply from the first quarter's KRW 25.4 billion.
Full-year 2025 operating profit turned positive at KRW 6.9 billion, reversing two consecutive years of operating losses in 2024 (-KRW 51.4 billion) and 2023 (-KRW 56.0 billion).
Still, 2025 net income attributable to owners remained negative at -KRW 31.1 billion despite the operating profit turnaround, though the trailing four quarters through Q2 2026 swung to a large net profit.
Its vertically integrated LAB-NP production structure, unique among domestic producers, has become a competitive edge amid a global supply-chain reshuffle driven by Middle East geopolitical risk.
Guarantee exposure to construction subsidiary Isu Construction fell from KRW 98.6 billion at end-2025 to KRW 20.8 billion at end-March 2026, easing affiliate risk.
Founded in 1969 as Korea's first petrochemical company, Isu Chemical operates a vertically integrated structure that produces normal paraffin (NP) from kerosene and uses it as feedstock to manufacture linear alkylbenzene (LAB).
As of April 2026, its LAB capacity stood at 180,000 tons and NP capacity at 220,000 tons, making it the only domestic chemical company producing both products in-house. Raffinate, a byproduct of NP production, is sold back to S-Oil, completing a tightly linked feedstock chain.
LAB is used as a raw material for synthetic detergents, with specialty-grade product mix expanding alongside growing demand for premium detergents, while NP serves as an industrial material for detergents, wax, and electrical insulating oil.
The company also runs a lubricants business under a technology partnership with France's Total. In May 2023, Isu Chemical spun off its precision chemicals and solid-state battery materials business, including lithium sulfide, into a separately listed entity, Isu Specialty Chemical.
Isu Chemical's subsidiaries include construction unit Isu Construction and biopharmaceutical unit Isu Abxis, meaning consolidated results reflect non-chemical business performance as well.
At the group level, printed circuit board maker Isu Petasys is a separately listed affiliate, and the group has publicly framed its growth strategy around two pillars: chemicals and IT.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩339.9B | ₩3.9B | 1.2% |
| 2025Q3 | ₩441.8B | ₩6.4B | 1.4% |
| 2025Q4 | ₩477.2B | -₩3.4B | −0.7% |
| 2026Q1 | ₩635.9B | ₩25.4B | 4.0% |
| 2026Q2 | ₩743.4B | ₩96.6B | 13.0% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩2.2T | ₩36B | ₩27.7B | 1.6% | 9.1% | 193.0% |
| 2023 | ₩2T | -₩56B | -₩31.3B | −2.8% | −19.8% | 319.5% |
| 2024 | ₩1.9T | -₩51.4B | -₩47.4B | −2.7% | −45.4% | 331.7% |
| 2025 | ₩1.7T | ₩6.9B | -₩31.1B | 0.4% | −32.3% | 305.0% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23
Isu Chemical's annual revenue declined for four consecutive years, from KRW 2.208 trillion in 2022 to KRW 1.995 trillion in 2023, KRW 1.916 trillion in 2024, and KRW 1.660 trillion in 2025, while operating profit turned positive at KRW 6.9 billion in 2025 after two straight years of losses (-KRW 56.0 billion in 2023, -KRW 51.4 billion in 2024).
Operating margin moved from 1.6% in 2022 to -2.8% in 2023 and -2.7% in 2024 before turning positive again at 0.4% in 2025.
However, net income attributable to owners stayed negative for three straight years at -KRW 31.3 billion in 2023, -KRW 47.4 billion in 2024, and -KRW 31.1 billion in 2025 despite the operating profit turnaround, suggesting that financial costs tied to a high debt ratio (305.0% in 2025) and subsidiary-related items weighed heavily below the operating line.
On a quarterly basis, operating profit was KRW 3.9 billion in Q2 2025, KRW 6.4 billion in Q3 2025, and -KRW 3.4 billion in Q4 2025 before jumping to KRW 25.4 billion in Q1 2026 and KRW 96.6 billion in Q2 2026.
That second-quarter 2026 figure was roughly 14 times the full-year 2025 operating profit and a quarterly record. Net income attributable to owners also swung decisively into profit, reaching KRW 21.1 billion in Q1 2026 and KRW 76.5 billion in Q2 2026.
Summing the trailing four quarters through Q2 2026, owners' net income totaled roughly KRW 85.0 billion, a sharp reversal from the full-year 2025 loss of KRW 31.1 billion.
The company attributes this improvement to a combination of widening LAB/NP product spreads and the construction subsidiary's return to profitability.
According to the company, the global LAB/NP market is undergoing rapid supply-chain realignment as capacity expands in the Middle East and Asia while facilities close in Europe.
Compounding this, U.S. air strikes on Iran in February 2026 disrupted Middle East refining and petrochemical operations, reducing Middle East-origin LAB supply and creating cracks in global availability.
For NP, analysts point to energy cost burdens and scheduled maintenance in Europe combined with Asian plant closures as factors that could make the supply shortage structural rather than temporary.
Isu Chemical, as the only domestic producer with vertically integrated NP and LAB production, is seen as better positioned than peers in terms of feedstock security and production stability.
The company is also shifting its product mix toward specialty-grade LAB and NP alongside general-purpose detergent feedstock, with analysts noting that specialty products carry substantially wider spreads and stickier customer relationships than commodity grades.
That said, the extent to which current favorable conditions depend on geopolitical disruption also implies that spreads could normalize if the underlying supply situation eases.
Isu Chemical has stated that tight supply-demand conditions for its core chemical products are expected to affect the market from late 2026 into 2027.
A company representative said tight supply linked to the Middle East situation is expected to persist and that the firm intends to strengthen both profitability and financial soundness through stable production and its global sales network.
Construction subsidiary Isu Construction has maintained profitability since Q1 2026 by expanding public housing work and broadening into civil infrastructure and plant construction, which is cited as a factor easing the affiliate risk that previously discounted consolidated results.
Over the medium to long term, the company said it is pursuing a green hydrogen business via an ammonia cracking project in response to growth in the clean hydrogen market.
IBK Investment Securities noted in a July 2026 report that a combination of core equipment replacement effects in NP extraction from kerosene and reduced construction-segment risk could lead to a re-rating of the chemical business's value.
It should also be noted, however, that the solid-state battery materials business has already been spun off into a separate listed entity, Isu Specialty Chemical, meaning growth in that business has only limited direct impact on Isu Chemical's own consolidated results.
Isu Chemical's earnings structure has been improving in direction, moving from overlapping operating and net losses in 2023-2024 to an operating profit turnaround in 2025 and a substantial net income recovery in the first half of 2026.
This pace of earnings recovery has fed into how trading multiples have formed recently, and how market participants weigh it going forward may hinge on whether the improvement proves durable across coming quarters.
From a price-to-book perspective, indicators exist to gauge the premium or discount to net assets, but results can differ depending on whether the calculation basis is owners' equity or total equity, warranting caution in simple comparisons.
The company has not paid a cash dividend through its most recent fiscal year, leaving the durability of operating performance itself, rather than shareholder returns, as the key variable.
Separately, the fact that multiple brokerages have withheld target prices (Not Rated) on affiliate Isu Specialty Chemical, which trades as its own listed entity, illustrates how differently the market views valuation for new-business ventures within the group.
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 2026-08-23
Operating profit surged to KRW 25.4 billion in Q1 2026 and KRW 96.6 billion in Q2 2026, together exceeding full-year 2025 operating profit (KRW 6.9 billion) within a single quarter. IBK Investment Securities attributed this surge to NP supply shortages and improved LAB product mix in a July 2026 report. Continued growth in the specialty product share could offer further room for margin improvement.
As the only domestic company producing both NP and LAB in-house, Isu Chemical is viewed as having an edge over competitors in feedstock security and production stability.
When NP is in short supply, rivals with only LAB capacity face constraints on expanding output, whereas Isu Chemical's vertical integration allows for relatively stable operation.
This is cited as a factor behind the company's improved pricing power amid the supply-chain reshuffle triggered by Middle East geopolitical risk.
Guarantee exposure to construction subsidiary Isu Construction fell 78.9% in a single quarter, from KRW 98.6 billion at end-2025 to KRW 20.8 billion at end-March 2026. Isu Construction also returned to operating profit over the same period by expanding its share of public-sector work.
Analysts note that the affiliate risk which had previously discounted consolidated results despite chemical-business improvement is fading quickly.
A significant part of the recent earnings improvement stems from Middle East supply disruptions following U.S. air strikes on Iran in February 2026. Should the situation ease or new capacity enter the market, spreads could narrow again.
Whether the improvement is driven more by structural or temporary geopolitical factors remains to be confirmed in coming quarters.
Net income attributable to owners posted losses for three straight years from 2023 to 2025, with a -KRW 31.1 billion net loss in 2025 despite positive operating profit. This suggests financial costs from a high 305.0% debt ratio, along with subsidiary-related items, remain a substantial drag.
Whether the net income recovery seen in the first half of 2026 will hold on a full-year basis still needs to be confirmed.
Prices of kerosene, the feedstock for NP, and benzene, used in LAB production, could see greater volatility depending on the Middle East situation. There are concerns that if the conflict is prolonged and oil prices stay elevated, the company may struggle to fully pass rising costs through to product prices. A narrowing of the cost-to-price spread could slow the recent pace of operating profit improvement.
Changes in the Middle East situation affect both LAB/NP spreads and feedstock (kerosene, benzene) prices simultaneously. An early de-escalation could weaken the currently favorable supply-demand environment.
Conversely, a prolonged conflict carries the risk that cost pressures outpace the ability to pass costs through to selling prices.
Guarantee exposure to construction subsidiary Isu Construction has been reduced but not fully eliminated, and could become a burden again if construction market conditions shift.
Volatility in the earnings of non-chemical units, such as biopharmaceutical subsidiary Isu Abxis, can also continue to affect consolidated results. This is a factor that could prevent improvement in the core chemical business from fully translating into consolidated net income.
Ongoing capacity expansion in the Middle East and Asia for LAB could ease the currently tight supply-demand balance once new capacity ramps up fully. Because spreads are heavily influenced by geopolitical events, the recent pace of earnings improvement may not persist once industry conditions normalize.
The pace of downstream detergent demand growth is another variable that could affect whether current spreads are sustained.
The Q3 2026 quarterly report is expected around this time, providing a chance to check whether the record Q2 operating profit (KRW 96.6 billion) trend continued and whether LAB/NP spreads held up.
It is worth monitoring whether the company's stated outlook for tight supply-demand conditions 'from year-end into next year' actually holds, along with feedstock price and spread trends tied to developments in the Middle East.
This will be a point to check whether the guarantee exposure to Isu Construction has been further reduced and whether the net income recovery seen in the first half of 2026 held on a full-year basis, ending the three-year streak of net losses.
It is worth watching progress on Isu Chemical's ammonia-cracking-based green hydrogen initiative, as well as the ramp-up of the lithium sulfide mother plant at separately listed affiliate Isu Specialty Chemical, and how these affect valuation of the group's new-business ventures.
Isu Chemical has moved from operating losses in 2023-2024 to an operating profit turnaround in 2025, and further to record-level operating and net income in the first half of 2026.
This improvement reflects a combination of the company's unique domestic NP-LAB vertical integration and a global supply-chain reshuffle triggered by Middle East geopolitical risk, with reduced guarantee exposure and a return to profit at construction subsidiary Isu Construction also easing affiliate risk.
That said, net income attributable to owners posted losses for three straight years through 2025, and the burden of financial costs tied to a high debt ratio remains a factor to weigh.
Because much of the recent earnings improvement depends on geopolitical developments, spreads could narrow again if the Middle East situation eases or new LAB capacity enters the market.
Conversely, if the NP supply shortage proves structural, the competitive value of the vertically integrated model could become more pronounced.
Quarterly results from Q3 onward, trends in guarantee exposure related to Isu Construction, and developments in the Middle East will likely be the key variables shaping the earnings trajectory going forward.
Report written 2026-09-05 · Data as of 2026-09-04
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