PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩500 per share · Prices as of the 2026-10-02 close
Seo Heung, leveraging its leading domestic position in hard capsules and health-supplement contract manufacturing, has moved past a 2023 profit trough with revenue and operating profit recovering together through 2024-2025.
2025 revenue reached KRW 722.3bn and operating profit KRW 50.2bn, up 10.6% and 48.4% year-on-year respectively, extending the recovery.
Operating margins in Q1 and Q2 2026 reached about 10.5% and 10.6%, notably above the 2025 full-year level of 7.0%.
Net profit attributable to owners plunged to about KRW 6.1bn in 2023 before recovering to roughly KRW 43.5bn in 2025, reflecting significant volatility.
The company holds an overwhelming share of the domestic hard-capsule market, while aging demographics and rising health-management demand support growth in its health-supplement segment.
Volatility in equity-method gains/losses from affiliates remains a factor that can sway quarterly net profit trends.
Founded in 1973 and listed on the KOSPI in 1990, Seo Heung is a capsule specialist operating across three pillars: capsules, raw materials, and cosmetics.
In the capsule segment the company manufactures hard capsules while also providing contract manufacturing (OEM/ODM) of soft-capsule pharmaceuticals and health supplements; the raw-material segment supplies gelatin and collagen, and the cosmetics segment produces basic cosmetics on an OEM/ODM basis.
Through 13 affiliates including Geltec, Suheung America, and Suheung Vietnam, the company operates an integrated domestic and overseas production and raw-material sourcing network.
It has progressively expanded overseas manufacturing bases, building a plant in the United States in 1998 and two plants in Vietnam in 2008 and 2014.
In 2022 the company spun off the liquid and jelly business at its Ochang, Cheongju site into Suheung Healthcare, restructuring itself around solid-dosage forms while the subsidiary focused on liquid and jelly products.
Seo Heung holds what is effectively a dominant position in the domestic hard-capsule market and is regarded as one of the leading players in the global hard-capsule market.
Its health-supplement business spans a comprehensive OEM/ODM system covering individually approved functional ingredients through tablets, granules, and jellies, making it a production partner for numerous domestic supplement brands.
The diversified portfolio spanning pharmaceuticals, supplements, and cosmetics is seen as reducing dependence on any single segment while pursuing both stability and growth.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩190B | ₩20.1B | 10.6% |
| 2025Q3 | ₩185B | ₩13.7B | 7.4% |
| 2025Q4 | ₩166.4B | ₩4.8B | 2.9% |
| 2026Q1 | ₩201.6B | ₩21.2B | 10.5% |
| 2026Q2 | ₩212.9B | ₩22.5B | 10.6% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩635B | ₩62B | ₩34B | 9.8% | 8.1% | 97.2% |
| 2023 | ₩594.6B | ₩43B | ₩6.1B | 7.2% | 1.4% | 108.3% |
| 2024 | ₩653.3B | ₩33.8B | ₩18.3B | 5.2% | 4.0% | 100.4% |
| 2025 | ₩722.3B | ₩50.2B | ₩43.5B | 7.0% | 8.9% | 96.1% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-21
Seo Heung's annual results have shown pronounced swings.
The solid 2022 performance—revenue of KRW 635bn and operating profit of KRW 62bn (9.8% operating margin)—gave way in 2023 to a simultaneous decline in revenue to KRW 595bn and operating profit to KRW 43bn (7.2% margin), with net profit attributable to owners collapsing to about KRW 6.1bn, the year's hardest hit.
In 2024 revenue rebounded to KRW 653bn and operating profit improved modestly to KRW 34bn (5.2% margin), though owners' net profit recovered only to around KRW 18bn, a slower pace.
In 2025, all three metrics improved markedly—revenue of KRW 722bn, operating profit of KRW 50bn (7.0% margin), and owners' net profit of KRW 43bn—marking a clear entry into recovery.
On a quarterly basis, operating profit briefly weakened to about KRW 4.8bn (2.9% margin) in Q4 2025, but Q1 2026 revenue of KRW 201.6bn with operating profit of KRW 21.2bn (10.5% margin) and Q2 2026 revenue of KRW 212.9bn with operating profit of KRW 22.5bn (10.6% margin) delivered two consecutive quarters of double-digit operating margins, well above the full-year 2025 average.
However, owners' net profit told a more mixed story: in Q2 2025 it reached about KRW 23.9bn, exceeding that quarter's operating profit of KRW 20.1bn due to a large non-operating gain, whereas Q1 and Q2 2026 owners' net profit of about KRW 11.8bn and KRW 13.7bn respectively showed a lower conversion rate from operating profit, apparently reflecting volatility in equity-method gains and losses from affiliates.
Trailing four-quarter (Q3 2025 through Q2 2026) owners' net profit totaled roughly KRW 39.1bn, indicating the improvement trend has persisted into the recent period.
Cash flow also improved, with operating cash flow of KRW 76.9bn in 2025 rising steadily from KRW 10.5bn in 2023 and KRW 56.2bn in 2024, suggesting the profit recovery is translating into actual cash generation.
The hard-capsule and health-supplement contract manufacturing industry in which Seo Heung operates has maintained long-term growth on the back of population aging and expanding health-management demand.
FnGuide assessed that demand for health supplements continues to rise amid an aging population and greater health awareness, driving earnings growth.
Seo Heung's effectively dominant position in the domestic hard-capsule market positions it as an essential capsule supply partner for domestic supplement and pharmaceutical companies, and such economies of scale mean fixed-cost burden falls relatively as utilization rises.
In terms of competition, dedicated CDMO players such as RP Bio focus on soft-capsule-centered supplement and pharmaceutical contract manufacturing, overlapping with Seo Heung in some dosage forms and customer segments while Seo Heung's position remains most pronounced in hard capsules.
Overseas, particularly in China, demand for health supplements has been growing steadily amid an aging population and rising health consciousness, and Chinese authorities have been refining regulations, including improvements to special-food registration systems and new expedited review channels to support market entry for quality products.
That said, China's consumer penetration rate remains lower than in mature markets, meaning growth potential coexists with uncertainty over the pace of consumption recovery.
Seo Heung participated in CPHI/Hi Korea 2026, held at COEX in Seoul in August 2026, showcasing its capsule dosage-form technology and health-supplement OEM/ODM capabilities to domestic and international buyers in a bid to expand overseas sales channels.
The Korea Investors Service Council (Korea IR Service), in a March 2026 report reviewing Seo Heung's business structure and earnings trend, forecast that top-line growth and profit recovery would proceed simultaneously in 2026.
The report identified normalization of hard-capsule segment profitability and growth in health-supplement exports to China as key variables for future earnings. Indeed, Q1 and Q2 2026 results showed an operating-leverage effect in which operating profit grew far faster than revenue, consistent with that outlook.
The company's fixed-cost structure, built on large-scale production facilities and automated lines, leaves room for profitability to improve relatively quickly as utilization and sales volumes rise.
That said, equity-method gains and losses from affiliates have been affecting net profit on a quarterly basis, meaning improvements in operating profit may not always translate proportionally into net profit gains.
Overseas, expansion of production bases in the United States and Vietnam along with export channels for health supplements to markets such as China are cited as future growth pillars, and the company has been pursuing overseas buyer development through exhibitions such as CPHI/Hi Korea.
Gelatin raw-material price volatility, the broader global economic backdrop, and the pace of China's consumption recovery remain variables that will determine whether the earnings improvement continues.
Seo Heung passed through a profit trough in 2023 and has shown revenue and operating profit recovering together through 2024-2025, with quarterly operating margins in the first half of 2026 rising above the full-year average.
During this profit-recovery phase, the share price has traded below per-share net asset value, placing it in a discount range relative to net assets.
Some observers note that market assessment could shift if the sustainability of profit improvement is confirmed, but non-operating volatility such as equity-method gains and losses from affiliates remains a factor to weigh when assessing the quality of earnings.
Dividends have been maintained at a consistent level each year, though the dividend yield itself is not particularly high, a factor separate from any reassessment tied to profit growth.
Judgments on valuation are best made by tracking quarterly margin trends and the stability of the net-profit conversion rate going forward.
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 2026-08-21
Built on a fixed-cost structure supported by large-scale production facilities and automated lines, operating margins reached about 10.5% and 10.6% in Q1 and Q2 2026, respectively, clearly above the 7.0% full-year 2025 level.
A classic operating-leverage pattern is emerging in which operating profit grows faster than revenue. If utilization and sales volumes rise further, the fixed-cost dilution effect has room to expand.
Seo Heung holds what is effectively a dominant position in the domestic hard-capsule market and is regarded as one of the leading players globally. As an essential supply partner for supplement and pharmaceutical companies, it maintains a stable demand base.
This position acts as an entry barrier for competitors, providing an advantageous position in pricing and volume negotiations.
Structural growth in the health-supplement segment continues, driven by an aging population and expanding health-management demand.
Overseas markets such as China are seen as having growth potential given lower consumer penetration than mature markets, and the company has been pursuing overseas buyer development through exhibitions such as CPHI/Hi Korea. An overseas supply chain leveraging production bases in the United States and Vietnam is already in place.
In Q2 2025, owners' net profit of about KRW 23.9bn exceeded operating profit of KRW 20.1bn, whereas in Q1 and Q2 2026 the net-profit conversion rate relative to operating profit actually declined.
This reflects fluctuations in non-operating items such as equity-method gains and losses from affiliates, showing that operating improvement does not always translate directly into net-profit improvement.
In 2023, owners' net profit plunged to about KRW 6.1bn, a sharp contraction from roughly KRW 34.0bn in 2022.
Revenue and operating margin also weakened together during that period, so if industry factors such as cost inflation or inventory adjustments recur, the possibility of renewed profit volatility cannot be ruled out.
While China's health-supplement consumer penetration rate is lower than mature markets and is seen as having long-term growth potential, global economic slowdown and the pace of China's consumption recovery are cited as near-term variables.
The complexity of registration and customs procedures amid changing regulations is also a factor that could affect the pace of export expansion.
Fluctuations in key raw-material prices such as gelatin have a direct impact on cost structure. With overseas production entities in the United States and Vietnam, exchange-rate movements also constantly affect performance. A sharp rise in raw-material procurement costs could again slow the margin-improvement trend.
Equity-method gains and losses related to affiliates appear to have a meaningful quarterly impact on net profit. In Q1 2026, investment gains/losses from affiliates turned negative, constraining the pace of net-profit improvement. Such non-operating factors remain a source of reduced predictability in quarterly results going forward.
Exporting health supplements to markets such as China requires procedures including local customs registration and sanitary approval, and tightened regulations or procedural delays could disrupt export expansion plans.
China has continued to revise labeling and review standards for special foods, meaning the regulatory environment requires ongoing monitoring.
The Q3 2026 quarterly report is due around this time; the key focus is whether the double-digit operating margin seen in Q1 and Q2 carries through to Q3.
Amid China's peak online retail season, it is worth checking health-supplement export data and the pace of China's consumption recovery.
This will be a point to check whether equity-method gains/losses from affiliates stabilize again and whether the net-profit conversion rate relative to operating profit improves.
The FY2026 business report and dividend proposal are due around this time, allowing final confirmation of whether the annual profit recovery persisted through a full year.
Seo Heung has passed through a 2023 profit trough, with revenue and operating profit recovering together through 2024-2025, and in the first half of 2026 quarterly operating margins improved to levels exceeding the full-year average.
A firm position in the domestic hard-capsule market and structural demand growth in the health-supplement segment support business stability.
However, non-operating volatility such as equity-method gains/losses from affiliates has created periods where operating-profit improvement does not fully translate into net-profit improvement, warranting attention to the quality of net profit.
Growth in overseas health-supplement exports including to China, raw-material prices, and the broader global economic backdrop remain key variables for gauging the sustainability of future earnings improvement.
It is reasonable to assess the earnings trajectory going forward by tracking quarterly margin trends alongside the stabilization of non-operating items. This report is prepared for informational purposes and does not include a buy or sell recommendation.
Report written 2026-09-05 · Data as of 2026-09-04
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