KOSPIChemicals017960

Hankuk Carbon

₩20,700▲ 1.97%2026-10-02 close

Market Cap

₩1.1T

Turnover

₩2.3B

Volume

110,000 shares

Shares out.

51.7M

PER

11.1×

PBR

1.7×

EPS

₩2,024

Dividend Yield

1.42%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩320 per share · Prices as of the 2026-10-02 close

Report overview

Record LNG Insulation Profits Meet a Cost Test

An oligopolistic LNG carrier insulation position and high-margin secondary barrier shipments have pushed operating margins into the high teens, but second-half raw material cost pass-through and Qatar-related geopolitical variables now sit on the other side of the ledger.

1
2025 revenue reached KRW 908.8bn with operating profit of KRW 131.0bn (14.4% margin), extending four straight years of top-line growth since 2022, while the bottom line moved from a 2023 net loss to KRW 101.7bn of net profit in 2025.
2
Quarterly operating margin rose from 13.7% in 2Q25 to 20.7% in 2Q26; margin expansion despite a flat top line is the defining feature of recent results.
3
The company is effectively the sole global supplier of secondary barrier (SB) material for GTT Mark III cargo tanks, and shipments to Chinese and Japanese yards alongside Korea's big three have become a margin pillar.
4
Supply contracts with HD Hyundai Heavy Industries and HD Hyundai Samho in March 2026 and with Hanwha Ocean in May 2026 were followed by a KRW 50bn investment in the Miryang nano-convergence industrial complex and an equity injection into a US entity.
5
On the other side, second-half pass-through of higher MDI and other raw material prices, delivery-schedule variables tied to the strike on Qatar's Ras Laffan facilities, and swings in quarterly net profit remain negative factors.

Business structure

Hankuk Carbon makes cryogenic insulation panels for LNG carrier cargo containment systems as well as carbon and glass fiber prepregs; the bulk of revenue comes from the industrial materials side that includes LNG insulation, while general materials such as fishing rod, leisure and industrial prepregs are a relatively small share.

Its product base splits between polyurethane foam insulation panels and the secondary barrier (SB) and Triplex used inside cargo tanks.

The company is effectively the world's sole supplier of the secondary barrier material required for France-based GTT's Mark III cargo tanks, and expanding Mark III orders at large Chinese yards have driven growth in high-margin SB exports.

Shipments to Chinese shipbuilders, in addition to domestic customers, are now ramping up.

Domestic clients include Hanwha Ocean, Samsung Heavy Industries and the HD Hyundai group: in March 2026 it signed insulation supply contracts worth KRW 184.9bn with HD Hyundai Heavy Industries and KRW 42.9bn with HD Hyundai Samho, and on May 21 it disclosed a KRW 72.0bn contract with Hanwha Ocean running from May 21, 2026 to December 26, 2027.

The insulation market has an oligopolistic structure, with Dongsung Finetec as the main domestic peer.

On capacity, LNG insulation output capability has risen roughly 50% from an annual 20-25 vessel equivalent before the 2023 fire to 30-35 today, with post-fire investment raising automation to improve productivity and costs.

Diversification centers on composite-based defense and aerospace: heat-resistant material for the Korean Vertical Launching System flame handling device and nozzle assemblies for the Cheongung-II missile are cited as component order items, and the defense business, previously limited to development and prototypes, shifted to mass production in 2025.

On investment, in April 2026 the company secured about 34,850 square meters in the Miryang nano-convergence national industrial complex, committing KRW 15.6bn for land and KRW 34.4bn for buildings and equipment, a total of KRW 50bn, to expand SB output and pursue space, aviation and defense projects. It also decided in April 2026 to inject KRW 29.6bn (USD 20mn) into a US entity, equal to 5.1% of equity.

Earnings trend

Quarterly revenue · Operating profit

₩231.3B₩31.6B25Q2₩221.1B₩29.9B25Q3₩231.8B₩38.3B25Q4₩211.8B₩41.1B26Q1₩243.4B₩50.4B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩369.3B₩24.8B2022₩594.4B₩16.5B2023₩741.7B₩45.4B2024₩908.8B₩131B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩231.3B	₩31.6B	13.7%
2025Q3	₩221.1B	₩29.9B	13.5%
2025Q4	₩231.8B	₩38.3B	16.5%
2026Q1	₩211.8B	₩41.1B	19.4%
2026Q2	₩243.4B	₩50.4B	20.7%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩369.3B	₩24.8B	₩20.3B	6.7%	5.0%	44.8%
2023	₩594.4B	₩16.5B	-₩13.4B	2.8%	−3.0%	74.3%
2024	₩741.7B	₩45.4B	₩20.3B	6.1%	4.3%	85.3%
2025	₩908.8B	₩131B	₩101.7B	14.4%	17.5%	79.8%

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

Annually, profitability deteriorated sharply from 2022 revenue of KRW 369.3bn and operating profit of KRW 24.8bn (6.7% margin) to 2023 revenue of KRW 594.4bn with operating profit of KRW 16.5bn (2.8%) and a net loss of KRW 13.4bn, then recovered to 2024 revenue of KRW 741.7bn, operating profit of KRW 45.4bn (6.1%) and net profit of KRW 20.3bn, before stepping up to 2025 revenue of KRW 908.8bn, operating profit of KRW 131.0bn (14.4%) and net profit of KRW 101.7bn.

The 2023 trough combined fire-related operating disruption with cost pressure, after which capacity expansion, automation and higher selling prices drove the margin recovery.

By quarter, revenue and operating profit ran KRW 231.3bn / KRW 31.6bn (13.7%) in 2Q25, KRW 221.1bn / KRW 29.9bn (13.5%) in 3Q25, KRW 231.8bn / KRW 38.3bn (16.5%) in 4Q25, KRW 211.8bn / KRW 41.1bn (19.4%) in 1Q26 and KRW 243.4bn / KRW 50.4bn (20.7%) in 2Q26: the top line hovered in the KRW 210-240bn range while margins widened for five consecutive quarters.

In 1Q26 operating profit rose even as revenue fell 8.7% quarter on quarter, and the quarter was assessed as slightly beating consensus, with revenue down 5.7% and operating profit up 32.0% year on year.

For the 2Q26 improvement, stronger cryogenic insulation demand on brisk LNG carrier ordering, a favorable exchange rate, and continued shipments of high-margin secondary barrier products were cited. On pricing, one analysis noted that the 1Q26 average selling price was 9.0% above the 2025 full-year average.

Summing the four quarters from 3Q25 to 2Q26 gives revenue of KRW 908.2bn, operating profit of KRW 159.7bn (17.6% margin) and net profit attributable to owners of KRW 102.6bn, a step above the full-year 2025 margin level.

One caveat is the recurring gap between operating and net profit: 3Q25 (KRW 29.9bn operating versus KRW 15.7bn net) and 1Q26 (KRW 41.1bn versus KRW 15.5bn) both saw non-operating swings compress the bottom line.

On the balance sheet, equity of KRW 580.2bn against liabilities of KRW 463.1bn brought the debt-to-equity ratio down from 85.3% in 2024 to 79.8% in 2025, while operating cash flow stayed positive for three straight years at KRW 56.5bn in 2023, KRW 150.5bn in 2024 and KRW 131.5bn in 2025.

Industry analysis

The end market, LNG carrier ordering, is in another expansion phase led by US projects.

Citing Clarksons data, media reports project global LNG carrier orders rebounding to about 115 vessels in 2026 as final investment decisions land for Plaquemines Phase 2, Port Arthur and Rio Grande Phase 1, with Qatar's fleet renewal alone expected to add 15-30 more. Medium-term demand is also deep.

DS Investment & Securities estimated that projects expected to reach FID in 2026 imply a need for 131 new LNG carriers in 2029 and 101 in 2030, that the confirmed 81.4 MTPA of US export projects alone would require another 150-160 vessels, and that Korean yards had only 60-65 remaining 2029 slots as of March.

On slot availability, Chinese annual LNG carrier capacity was about 70% filled for 2029 delivery versus roughly 30% for Korean yards, while the newbuild price for a 174,000 cubic meter LNG carrier held at USD 248.5mn per vessel as of August 7.

Insulation pricing power moves with vessel prices: the two Korean insulation suppliers' prices show a positive correlation with LNG carrier newbuild prices, with a 10% rise in ship prices translating into roughly 3-4% higher panel prices.

In cycle terms, the market sits at the handover from Qatar's first batch to higher-priced second-batch work.

QatarEnergy's first LNG carrier program is essentially complete, with more than 45 of the 54 vessels assigned to Korea's big three delivered, and higher-priced second-phase volumes are expected to drive results from here. Middle East risk, however, remains live.

After the strike on production facilities in Ras Laffan Industrial City, QatarEnergy declared force majeure to long-term supply contract countries, and its CEO said 17% of export capacity was damaged with recovery potentially taking up to five years.

The raw material cycle is another variable: between May and June 2026, analysts offered conflicting reads, with one noting that pure MDI prices had risen about 34% after the US-Iran conflict and another stating that polymeric MDI prices had stopped rising and turned lower.

Outlook

The company does not publish formal annual guidance, but its earnings commentary and broker estimates indicate direction.

Management said it would sustain steady growth in the insulation business on the back of expanding global LNG carrier orders and new customer wins, with an official stating that its high-margin product competitiveness had been proven and that insulation would remain a stable earnings base.

The expansion axis is composites: the plan is to extend cryogenic insulation and composite technology accumulated in marine insulation into aerospace, autos and EVs, and defense to diversify earnings. Capacity work is proceeding on two fronts.

Daol Investment & Securities said in a June 2026 report that investment in the Miryang nano-convergence national complex would lift high-margin secondary barrier capacity from an 80-vessel to a 100-vessel equivalent, pre-empting expanded LNG carrier construction in China and Japan, consistent with the KRW 50bn land and equipment commitment and the US subsidiary investment.

Defense profitability is the item to watch: in the same report Daol said the defense unit, previously a loss driver, was attempting to turn profitable as Cheongung and KVLS2 enter mass production, and projected defense revenue growing from the KRW 30bn range in 2026 to the KRW 50bn range in 2027.

Full-year estimates diverge.

Daol Investment & Securities forecast 2026 consolidated revenue of KRW 901.0bn and operating profit of KRW 175.5bn in its June 2026 report, while SK Securities, in a report reported in August 2026, said near-term momentum could weaken as war-driven raw material price increases feed through in the second half but still projected 2026 revenue of KRW 941.1bn and operating profit of KRW 183.2bn.

Conversely, IBK Investment & Securities said in a May 2026 report that some margin erosion was unavoidable as raw material price increases began flowing into costs from the second half.

The second-half question is therefore whether cost pass-through or the combination of pricing, currency and a richer SB mix dominates, and the third-quarter print will be the first hard read.

Valuation

PER

11.1×

PBR

1.7×

ROE

17.1%

EPS

₩2,024

BPS

₩13,202

Dividend per share

₩320

Because the company's earnings level has shifted dramatically within a few years, the reference period matters when reading multiples.

Following the 2023 net loss, the 2024 return to profit and the 2025 profit surge, the price-to-earnings multiple based on the most recent four quarters of profit sits, at the level shown on the live card, below the average for Korean chemicals and shipbuilding-equipment peers.

The price-to-book multiple, by contrast, is above one, implying a premium to net assets, while the dividend yield is modest relative to the scale of recent profits, reflecting a phase in which capital is directed toward capacity and overseas footprint rather than payouts.

Market views on valuation diverge: SK Securities, in a report covered in August 2026, cut its target price to KRW 49,000, applying a 17x target price-to-earnings multiple to estimated 2027 earnings to reflect share price declines across shipbuilding-equipment names, Korea Investment & Securities maintained a KRW 53,000 target on June 2, 2026, and Daol Investment & Securities raised its target from KRW 57,000 to KRW 61,000 on June 4, 2026.

These are the brokers' own views, not KOSAI's. Ultimately the multiple debate hinges on whether high-teens operating margins persist beyond the second half and whether defense and overseas bases genuinely add to 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

An order cycle meeting an oligopoly

Insulation is a mandatory input for LNG carrier construction, and the supplier base is narrow.

Projections that global LNG carrier orders rebound to about 115 vessels in 2026 alongside large-project FIDs and estimates of 131 vessels needed in 2029 and 101 in 2030 against only 60-65 remaining Korean slots are cited as evidence that the medium-term volume base is not thin. The March and May 2026 supply contract disclosures show those volumes converting into insulation orders.

High-margin secondary barrier and rising prices

Over five quarters in which revenue hovered between KRW 210bn and 240bn, the operating margin rose from 13.7% to 20.7%, meaning mix and pricing rather than volume drove profitability.

Cited drivers include effective sole-supplier status in Mark III secondary barrier material and expanding high-margin exports to Chinese yards and an analysis showing 1Q26 average selling prices 9.0% above the 2025 full-year level.

Given the positive correlation between vessel prices and panel prices, room for price negotiation remains while newbuild prices hold.

A second axis in defense, aerospace and overseas bases

The defense business shifted to mass production in 2025 and KVL2 deliveries are expected to raise its revenue contribution, and Daol Investment & Securities projected in June 2026 that defense revenue would grow from the KRW 30bn range in 2026 to the KRW 50bn range in 2027.

Alongside this run the KRW 50bn Miryang investment expanding SB capacity and funding space, aviation and defense projects and a USD 20mn injection into a US entity. As attempts to reduce reliance on a single LNG cycle, these are the checkpoints for structural change.

Bear factors

Lagged raw material cost pass-through

Insulation carries a heavy load of petrochemical and timber inputs such as MDI, polyols and plywood, while selling prices follow contracts already fixed to ship construction schedules.

IBK Investment & Securities said in a May 2026 report that some margin erosion was unavoidable as input cost increases fed into costs from the second half, flagging an approximately 34% rise in pure MDI prices after the US-Iran conflict.

Analysts also noted a structure in which raw material cost increases are difficult to pass on to customers. Whether the 20.7% operating margin of 2Q26 survives that pass-through is the test.

Qatar variables and delivery-schedule risk

Insulation revenue is recognized in step with yard construction progress, so vessel delivery delays directly affect revenue timing. QatarEnergy declared force majeure to long-term supply contract countries after the Ras Laffan strike, and its CEO cited 17% damage to export capacity with recovery of up to five years.

Korean shipbuilders consequently flagged the possibility of LNG carrier delivery delays stemming from disruption to the Qatar program. A temporary gap is also possible while the order pipeline shifts toward US-led projects.

Net profit volatility and rising investment

Operating margins improved, but net profit swings widely by quarter. In 3Q25 operating profit of KRW 29.9bn produced net profit of KRW 15.7bn, and in 1Q26 KRW 41.1bn of operating profit yielded KRW 15.5bn, with non-operating items repeatedly compressing the bottom line.

At the same time, investment decisions keep coming, including KRW 50bn at Miryang and KRW 29.6bn for the US entity, so depreciation and start-up costs could weigh on future margins. The debt-to-equity ratio rose from 44.8% in 2022 to 85.3% in 2024 before easing to 79.8% in 2025.

Risk factors

Costs and FX

Core input prices such as MDI and the won-dollar rate are the two levers on margins. In 2Q26 a favorable exchange rate together with high-margin secondary barrier shipments significantly improved the profit structure, which also means margins could give back ground if the currency reverses.

On inputs, diagnoses conflict, from an approximately 34% rise in pure MDI to polymeric MDI turning lower, so the quarterly cost ratio needs direct verification.

End-market orders and geopolitics

Because revenue tracks LNG carrier orders and build schedules at domestic and overseas yards, order-cycle delays feed through to results with a lag.

In late February 2026 there were forecasts that Iran-war variables could push back Qatar's third ordering round indefinitely, and QatarEnergy's plan to secure 128 vessels, with observers seeing a final figure near 200 remains a scenario in progress. Delays to US project FIDs are a risk in the same direction.

Facility and operational risk

There is precedent from the 2023 fire that halted operations; revenue grew that year but the operating margin fell to 2.8% and the company posted a net loss.

Reconstruction and expansion followed, moving insulation output from one plant to two and restoring utilization and capacity, an improvement, yet production remains concentrated in one region around Miryang.

With capacity expansion, automation and new sites proceeding at once, early-stage yields and staffing can become earnings variables.

What to watch next

Mid-November 2026
Third-quarter 2026 results. The first hard check on whether the operating margin, which reached 20.7% in 2Q26, holds after raw material cost pass-through, and on the direction of gross margin and cost ratios.
Fourth quarter of 2026
The flow of single supply contract disclosures for insulation tied to US project LNG carrier orders. After the HD Hyundai contracts in March 2026 and the Hanwha Ocean contract in May, the size and customer mix of new deals, including Chinese and Japanese yards, will show the substance of order momentum.
Late 2026 to first half of 2027
Construction and start-up timing for the KRW 50bn Miryang investment, progress on secondary barrier expansion, and developments at the USD 20mn US entity after establishment. The key is when expanded high-margin SB capacity translates into actual shipments.
January to March 2027
Confirmation of full-year 2026 results and the dividend decision. With profits sharply higher, how the payout ratio and shareholder return policy are set relative to capital spending will become clear.
As disclosed or announced
Whether LNG carrier delivery schedules are adjusted following Ras Laffan recovery and force majeure follow-up, and whether defense component deliveries for Cheongung and KVLS expand enough to turn that segment profitable. These respectively determine revenue timing and new-business profit contribution.

Overall view

Hankuk Carbon holds an oligopolistic position in the narrow, high-barrier market for LNG carrier insulation and is effectively the sole supplier of secondary barrier material.

Earnings improved in steps, from a net loss in 2023 to a return to profit in 2024 and then 2025 revenue of KRW 908.8bn, operating profit of KRW 131.0bn (14.4% margin) and net profit of KRW 101.7bn, with the quarterly operating margin widening for five consecutive quarters from 13.7% in 2Q25 to 20.7% in 2Q26.

Since margins expanded while revenue hovered in the KRW 210-240bn range, the driver appears to have been product mix, selling prices and currency rather than volume.

The constructive case rests on the US-led LNG carrier order pipeline, secondary barrier capacity expansion with attendant pricing leverage, and a second axis in defense, aerospace and overseas bases.

The cautious case rests on raw material cost pass-through from the second half, delivery-schedule variables after the Ras Laffan incident, quarterly volatility between operating and net profit, and the burden of rising investment.

On valuation, brokers have published diverging targets and forecasts, leaving the durability of the profit level underpinning those multiples through the second-half cost phase as the item to verify. 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.