KOSPIChemicals011780

Kumho Petro Chemical

₩117,500▲ 1.47%2026-10-02 close

Market Cap

₩3T

Turnover

₩3.5B

Volume

30,000 shares

Shares out.

25.2M

PER

6.4×

PBR

0.5×

EPS

₩19,784

Dividend Yield

1.35%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,700 per share · Prices as of the 2026-10-02 close

Report overview

Rubber Surprise, Durability in Question

Second-quarter 2026 operating profit surged, restoring confidence in earnings power, but with management itself flagging narrower spreads in the third quarter, the durability of this improvement is the central question.

1
Q2 2026 revenue was KRW 2,268.2bn with operating profit of KRW 339.0bn and owners' net profit of KRW 300.4bn, lifting the operating margin to roughly 15% (confirmed figures).
2
The company attributed the wider product spreads to pre-emptive buying amid Middle East-driven supply chain uncertainty, and guided for weaker profitability in the third quarter.
3
Capacity additions of 70k tonnes of EPDM (May 2025) and 35k tonnes of SSBR (December 2025) have been completed, so high-value specialty rubber volumes are now feeding into results.
4
A 2025 debt-to-equity ratio of 35.7% and operating cash flow of KRW 715.3bn keep the balance sheet flexible, and this is the final year of the current three-year shareholder return policy.
5
On the other side sit China-driven commodity oversupply, butadiene price volatility, and the earnings swings that pushed Q4 2025 profit down to near break-even.

Business structure

Kumho Petrochemical is a chemical materials company built around synthetic rubber, alongside synthetic resins, phenol derivatives, specialty rubber (EPDM/TPV), and energy and other operations.

Core synthetic rubber spans tire-grade SBR and BR, NB Latex used in nitrile gloves, and SSBR applied in high-performance tires for electric vehicles. The company says it holds world-leading NB Latex capacity and, lacking its own naphtha cracker (NCC), has long built domestic and overseas feedstock supply chains.

That NCC-free structure is seen as having limited its damage during the oversupply created by China's rising ethylene self-sufficiency.

By segment in Q2 2026, synthetic rubber posted revenue of KRW 987.1bn and operating profit of KRW 189.8bn, a 19.2% margin, while synthetic resins recorded KRW 375.4bn in revenue with KRW 37.4bn operating profit, and phenol derivatives KRW 492.8bn with KRW 55.1bn (Newspim, reported 7 August 2026).

The customer base spans domestic and global tire makers, Southeast Asian glove manufacturers, and auto parts and electronic materials firms, so each product line faces a different end market.

EPDM, a high-functionality specialty rubber for auto parts, completed a 70k tonne per year expansion in May 2025, while SSBR, considered well suited to EV tires, finished a 35k tonne per year addition in December 2025 and began commercial operation from Q1 2026.

The global NB Latex market is described as one where Kumho Petrochemical, LG Chem, Synthomer of the UK, and Nantex of Taiwan together hold more than half of the share.

Earnings trend

Quarterly revenue · Operating profit

₩1.8T₩65.2B25Q2₩1.6T₩84.4B25Q3₩1.6T₩1.6B25Q4₩1.8T₩59.4B26Q1₩2.3T₩339B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩8T₩1.1T2022₩6.3T₩359B2023₩7.2T₩272.8B2024₩6.9T₩271.8B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.8T	₩65.2B	3.7%
2025Q3	₩1.6T	₩84.4B	5.1%
2025Q4	₩1.6T	₩1.6B	0.1%
2026Q1	₩1.8T	₩59.4B	3.3%
2026Q2	₩2.3T	₩339B	14.9%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩8T	₩1.1T	₩1T	14.4%	18.1%	36.5%
2023	₩6.3T	₩359B	₩446.8B	5.7%	7.7%	36.8%
2024	₩7.2T	₩272.8B	₩348.6B	3.8%	5.8%	38.0%
2025	₩6.9T	₩271.8B	₩290.9B	3.9%	4.7%	35.7%

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

Earnings analysis

The annual numbers lay bare the amplitude of the cycle.

After a 2022 peak of KRW 7,975.6bn in revenue and KRW 1,147.7bn in operating profit (a 14.4% margin), margins stayed sharply compressed: 2023 revenue of KRW 6,322.5bn with KRW 359.0bn operating profit (5.7%), 2024 revenue of KRW 7,155.0bn with KRW 272.8bn (3.8%), and 2025 revenue of KRW 6,915.1bn with KRW 271.8bn (3.9%).

Yet 2025 operating cash flow reached KRW 715.3bn, more than double the KRW 322.3bn of 2024, showing cash generation improving ahead of reported profit. Quarterly, operating profit fell from KRW 84.4bn in Q3 2025 to just KRW 1.6bn in Q4 2025, essentially break-even, and stayed at KRW 59.4bn in Q1 2026.

For the first quarter, the company said that despite early-year demand recovery and wider spreads, butadiene prices spiked in early March while downstream buyers stayed on the sidelines.

Q2 2026 then reversed to KRW 2,268.2bn in revenue, KRW 339.0bn in operating profit, and KRW 300.4bn in owners' net profit, with that single quarter's net profit exceeding full-year 2025 net profit of KRW 290.9bn.

Management said supply chain anxiety from the US-Iran clash spurred buyers to secure product, widening spreads on key items, that flexible output and sales adjustments plus minimal inventory aided profitability, and that higher glove maker utilization turned the NB Latex business profitable.

Summing the last four quarters (Q3 2025 through Q2 2026) gives roughly KRW 7,281.7bn in revenue and about KRW 484.4bn in operating profit, with Q2 2026 alone accounting for roughly 70% of that operating profit. The scale of improvement is clear, but so is the extreme concentration of that profit in a single period.

On the balance sheet, end-2025 equity of KRW 6,246.5bn against liabilities of KRW 2,227.9bn produced a debt-to-equity ratio of 35.7%, down from 38.0% in 2024.

Industry analysis

The synthetic rubber cycle turns on the lag between butadiene feedstock costs and product prices, plus end demand from tires and gloves.

That lag showed up starkly in the first half of 2026: butadiene rose from an average USD 1,251 per tonne in February to USD 1,964 in March and USD 2,271 in April, while NB Latex export prices were reported at USD 1,578 per tonne in April 2026, up 82.8% from USD 864 a month earlier (citing NH Investment & Securities, reported May 2026).

On glove demand, NH Investment & Securities noted that Top Glove, the largest global glove maker, saw utilization rise 16 percentage points quarter on quarter to 89% and plans to expand capacity from 66bn to 70bn pieces by end-2026.

Trade policy is another swing factor: the US accounts for 37% of global nitrile glove demand as the largest consumer, and after steep tariffs on Chinese latex gloves the share of Southeast Asian imports expanded sharply, with Southeast Asia being a core customer region for Kumho Petrochemical's NB Latex.

On the supply side, restructuring of Asian commodity capacity is under way.

The government released a petrochemical restructuring roadmap in August 2025, approved final restructuring plans from HD Hyundai Oilbank, HD Hyundai Chemical, and Lotte Chemical in February 2026, and from Yeochun NCC, Hanwha Solutions, and DL Chemical in July 2026.

Yuanta Securities, in a November 2025 report, projected that more than 13m tonnes of ethylene capacity in Europe, Korea, Japan, and China would be sequentially shut in 2026-2027, cutting butadiene by-product supply by over 1.4m tonnes and intensifying competition for feedstock.

That is double-edged, however, since the same shift raises input costs and can squeeze margins without pricing power.

Outlook

The most concrete confirmed fact is management's own third-quarter framing. The company guided that third-quarter profitability would soften somewhat on weaker feedstock prices, the seasonal lull, and sluggish downstream demand. It explained that spreads on synthetic rubber and phenol derivatives could narrow.

A company official also said that despite the solid second quarter, margin compression is expected from the third quarter and burdens are numerous, adding that the firm would focus on strengthening competitiveness and cutting costs to secure profitability. On volumes, expansion effects still have room to run.

The company said the EPDM and SSBR expansions were completed in May and December 2025 respectively, and the added output contributed to Q2 2026 revenue.

Some see remaining headroom in utilization: Yuanta Securities projected in a November 2025 report that NB Latex utilization would rise stepwise from 54% in 2025 to 65% in 2026 and 75% in 2027.

Capital spending pressure is easing, as the same report expected 2026 capex to fall to around KRW 250bn with the major NB Latex, EPDM, and SSBR projects largely complete.

In addition, the 50:50 Malaysian epichlorohydrin (ECH) joint venture with OCI has been discussed as a potential contributor to epoxy profitability and equity-method income thanks to cheap hydroelectric power (reported January 2026). Ultimately, the second-half focus is how far added volumes and rising utilization can offset narrowing spreads.

Valuation

PER

6.4×

PBR

0.5×

ROE

7.9%

EPS

₩19,784

BPS

₩264,044

Dividend per share

₩1,700

Multiples here are hard to read because of the cyclicality of earnings. The peak profit of 2022 and the thin margins of 2024-2025 were generated on a similar equity base, so the multiple shifts dramatically depending on which year's profit is used as the anchor.

The shares trade well below the company's disclosed net asset value per share, that is, at a discount to book, which is directionally consistent with what is seen across Korea's commodity chemical sector.

Samsung Securities, in a report dated 8 July 2026, assessed the forward twelve-month price-to-book as materially lower than the 2023 average, and in the same report presented a target price of KRW 175,000.

Korea Investment & Securities presented a target price of KRW 160,000 in its first-quarter earnings review report of 8 May 2026.

On dividends, the company has based its payout on parent-only net income, and under the three-year policy 20-25% of that profit goes to dividends and 10-15% to share buybacks and cancellation, with this year the final year of the current policy.

The direction of the dividend yield therefore depends not only on the share price but also on parent-only profit and the design of any new return policy.

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

Bull factors

High-value specialty rubber volumes now feeding results

EPDM completed a 70k tonne per year expansion in May 2025, and SSBR finished a 35k tonne per year addition in December 2025 before entering commercial operation in Q1 2026. The company said the resulting additional output contributed to Q2 2026 revenue.

Even when commodity lines struggled in Q1 2026, the EPDM segment was reported to have earned KRW 31.1bn in operating profit, holding up relatively well. How far specialty rubber can cushion commodity volatility is the key to earnings stability.

NB Latex end-demand recovery and tariff-driven shifts

The company said that early in Q2 2026, higher glove maker utilization widened NB Latex demand and spreads, turning the business profitable.

After the US imposed steep tariffs on Chinese latex gloves, the share of Southeast Asian imports rose sharply, and Southeast Asia is cited as a core customer region for the company's NB Latex. Yuanta Securities forecast in a November 2025 report that NB Latex utilization would climb to 65% in 2026 and 75% in 2027. The remaining headroom in utilization itself is the pivot of this scenario.

Low leverage and a lighter investment burden

At end-2025, equity of KRW 6,246.5bn against liabilities of KRW 2,227.9bn gave a debt-to-equity ratio of 35.7%, while operating cash flow that year of KRW 715.3bn was far above 2024's KRW 322.3bn.

Samsung Securities noted that net debt at the end of the second quarter stood at KRW 90bn, down KRW 312bn from a year earlier, widening room for additional shareholder returns. Yuanta Securities forecast in a November 2025 report that 2026 capex would fall to around KRW 250bn as major expansions wrapped up. That leaves relatively contained cash-burn risk through a downturn.

Bear factors

Much of Q2 profit came from supply disruption

The company said spreads on key products widened as buyers rushed to secure material amid supply chain anxiety from the US-Iran clash. That implies part of the gain reflects a temporary supply-demand distortion rather than structurally better demand.

Management itself guided for softer profitability in the third quarter on weaker feedstock prices, seasonality, and sluggish downstream demand. The fact that Q2 2026 accounts for roughly 70% of the last four quarters' combined operating profit underlines how concentrated that profit is.

Feedstock lag can erode margins quickly

Q1 2026 operating profit of KRW 59.4bn came in below both Q2 2025's KRW 65.2bn and Q3 2025's KRW 84.4bn. Shinhan Securities analyzed that March butadiene prices jumped 61% month on month while SBR prices rose only 17%, sharply squeezing synthetic rubber margins.

It was also noted that butadiene is produced at naphtha crackers, and industry-wide utilization cuts reduced output and tightened supply. Even with flexible feedstock sourcing, the lag in passing costs through remains.

Structural commodity oversupply is still unfolding

China's ethylene self-sufficiency passed 100% and it turned into a net exporter, creating oversupply, with the company seen as relatively less exposed because it has no NCC. But relative advantage is not absolute protection, as shown by Q4 2025 operating profit of just KRW 1.6bn, essentially break-even.

Operating margins of 3.8% in 2024 and 3.9% in 2025 also bear the mark of commodity margin pressure. For NB Latex too, concerns about a swing to oversupply after global capacity additions have been raised in the past.

Risk factors

Feedstock and geopolitical risk

Butadiene swung from an average USD 1,251 per tonne in February 2026 to USD 2,271 in April. Such moves are simultaneously exposed to crude prices, Middle East conditions, and regional cracker utilization, all outside the company's control.

For Q1 2026, it was explained that butadiene prices soared in the wake of Middle East events, raising cost pressure. The same variable acted as a spread tailwind in the second quarter and a cost shock in the first, making its direction hard to forecast.

Downstream demand slowdown

Synthetic rubber feeds tires, resins feed appliances and auto interiors, and phenol derivatives feed construction and electronic materials, leaving the portfolio highly sensitive to end-market conditions. Analysts have previously noted that off-season demand weakness kept plants such as ABS running at low rates.

The company expects third-quarter profitability across key businesses to fall below the second quarter, citing buyer hesitation amid softer feedstock prices and weak downstream demand. If glove demand reflects an inventory cycle rather than structural recovery, the NB Latex improvement could also unwind.

Policy, restructuring, and the shareholder return transition

Following the government's petrochemical restructuring roadmap, major players' restructuring plans have been approved in sequence, reshaping the industry's structure. That alters both feedstock supply and the competitive landscape, working as both opportunity and burden for the company.

On shareholder returns, this is the final year of the current three-year policy, so how the framework of 20-25% of profit to dividends and 10-15% to buybacks and cancellation is renewed becomes a variable. Shifts in US tariff policy also create indirect exposure via Southeast Asian glove makers.

What to watch next

Late October to early November 2026
Q3 2026 results. The company has guided for weaker profitability than the second quarter, so the size of that decline, especially how far the synthetic rubber margin retreats from the 19.2% posted in Q2, is the first real test of whether the improvement holds.
During Q4 2026
Monthly butadiene prices and NB Latex export unit prices. Watch whether the gap between feedstock and selling prices widens again, as this tends to lead quarterly margins.
December 2026 to early 2027
Board resolutions and disclosures on dividends and treasury shares. Since this is the final year of the current three-year shareholder return policy, watch both the size of returns decided and whether the basis and horizon of a successor policy are laid out.
March 2027
The annual general meeting and confirmed full-year 2026 results. This will show where the annual operating margin has moved from the 3%-plus range of 2024-2025, alongside the dividend approval agenda.
Second half of 2026 through 2027
Actual execution of Asian commodity capacity restructuring and progress at the Malaysian ECH joint venture. Watch how the butadiene supply reduction from ethylene plant shutdowns actually feeds into feedstock availability and spreads, and from when the joint venture starts contributing equity-method income.

Overall view

Kumho Petrochemical's Q2 2026, with revenue of KRW 2,268.2bn, operating profit of KRW 339.0bn, and owners' net profit of KRW 300.4bn, showed that the company's earnings leverage remains substantial.

Still, that result rested on supply chain anxiety from Middle East geopolitical risk and pre-emptive buying to secure product, and management itself guided for softer third-quarter profitability, so the quality of the profit warrants separation.

Structurally, the positives are completed EPDM and SSBR expansions adding high-value volumes, remaining headroom in NB Latex utilization, and financial flexibility supported by a 35.7% debt-to-equity ratio and KRW 715.3bn of operating cash flow in 2025.

Against that sit a record of sharp quarterly drops, such as KRW 1.6bn of operating profit in Q4 2025 and KRW 59.4bn in Q1 2026, plus China-driven commodity oversupply and the wide amplitude of butadiene prices.

On valuation, the share price sits below the company's disclosed net asset value per share, directionally in line with the broader Korean commodity chemical sector.

For reference, one report noted that in the roughly three weeks after the second-quarter release the stock underperformed the KOSPI's gain (Asia Today, 28 August 2026).

What matters next is the extent of spread compression visible in third-quarter results and the year-end shareholder return decision; this report is for information purposes only and contains no buy or sell opinion or target price.

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.