KOSPIChemicals024890

Daewon Chemical

₩1,428▼ 10.19%2026-10-02 close

Market Cap

₩11.8B

Turnover

₩100M

Volume

80,000 shares

Shares out.

8.3M

PER

3.7×

PBR

0.2×

EPS

₩471

Dividend Yield

0.00%

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

Report overview

Out of the Red, Now Testing If Recovery Holds

Daewon Chemical returned to annual net profit in 2025 after three straight years of losses, but quarterly operating profit has continued to swing between gains and losses into 2026, leaving the durability of the turnaround still to be confirmed.

1
2025 revenue reached KRW 126.4bn (up slightly YoY), with operating profit of KRW 0.87bn ending two straight years of operating losses.
2
Net income attributable to owners swung to a profit of KRW 3.5bn in 2025 after three consecutive years of losses from 2022 to 2024.
3
The KRW 6.66bn net profit in Q4 2025 came despite an operating loss of KRW 0.76bn in the same quarter, suggesting a possible one-off contribution.
4
Revenue grew YoY in both Q1 and Q2 2026, but operating profit alternated again — a KRW 0.49bn profit in Q1 followed by a KRW 0.37bn loss in Q2.
5
The debt ratio eased from 263.9% in 2024 to 232.9% in 2025, but remains well above the 109.6% level recorded in 2022.

Business structure

Founded in 1974, Daewon Chemical is a manufacturer specializing in synthetic leather and wallpaper, with its business organized around three pillars: synthetic leather for footwear, automotive, and IT materials; wallpaper for interior decoration; and a refining business that recovers and re-refines waste DMF (dimethylformamide) generated during synthetic leather production.

The synthetic leather segment is the company's core revenue driver, and the company has been reported to supply materials to major global sportswear brands, drawing on wet-process artificial leather technology to serve customers such as Nike and Adidas.

Beyond footwear, synthetic leather applications extend to apparel, accessories, sports balls, furniture, and automotive interiors, with automotive-grade material reportedly used in door trim and seating for domestic carmakers.

The wallpaper business produces commercial and residential silk wallpaper products and tracks demand tied to housing construction and remodeling activity.

The refining business is an environmentally oriented operation that recovers waste DMF from artificial leather production, supported by ISO14001 environmental management certification and ongoing investment in air and wastewater treatment.

A brokerage note from April 2017 estimated that combined footwear, accessories, automotive, IT, and backing-pad applications made up the largest share of synthetic leather revenue, followed by wallpaper and refining, though this data is dated and the current segment mix may differ.

The company has historically been described as family-controlled, with the largest shareholder and related parties holding a substantial combined stake, and older reports referenced wallpaper distribution through an affiliated company.

In the synthetic leather market, multiple domestic and overseas material suppliers compete, making the retention of vendor status with end-demand customers such as sportswear brands and automakers an important variable for revenue stability.

Earnings trend

Quarterly revenue · Operating profit

₩28.9B₩400M25Q2₩31.1B₩800M25Q3₩31.2B-₩800M25Q4₩35B₩500M26Q1₩34.6B-₩400M26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩146.8B-₩7.4B2022₩122.2B-₩6.4B2023₩125.9B-₩6.1B2024₩126.4B₩900M2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩28.9B	₩400M	1.3%
2025Q3	₩31.1B	₩800M	2.7%
2025Q4	₩31.2B	-₩800M	−2.4%
2026Q1	₩35B	₩500M	1.4%
2026Q2	₩34.6B	-₩400M	−1.1%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩146.8B	-₩7.4B	-₩9.6B	−5.0%	−15.4%	109.6%
2023	₩122.2B	-₩6.4B	-₩9.7B	−5.3%	−18.5%	161.9%
2024	₩125.9B	-₩6.1B	-₩12.1B	−4.9%	−29.0%	263.9%
2025	₩126.4B	₩900M	₩3.5B	0.7%	7.9%	232.9%

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

Daewon Chemical's annual revenue fell from KRW 146.8bn in 2022 to KRW 122.2bn in 2023, then gradually recovered to KRW 125.9bn in 2024 and KRW 126.4bn in 2025.

Operating profit posted losses for three consecutive years from 2022 to 2024 (KRW -7.4bn, -6.4bn, and -6.1bn respectively) before turning to a KRW 0.87bn profit in 2025, lifting the operating margin from -4.9% in 2024 to 0.7% in 2025.

Net income attributable to owners also swung from losses of KRW -9.6bn, -9.7bn, and -12.1bn in 2022, 2023, and 2024 respectively to a profit of KRW 3.5bn in 2025.

Operating cash flow improved markedly, from KRW -13.7bn in 2024 to KRW +3.5bn in 2025, signaling recovery not just in reported earnings but also in cash generation.

On a quarterly basis, however, the quality of the recovery bears closer scrutiny: Q3 2025 posted an operating profit of KRW 0.85bn but a net loss attributable to owners of KRW -2.13bn, while conversely Q4 2025 recorded an operating loss of KRW -0.76bn alongside a net profit of KRW 6.66bn, suggesting non-operating or one-off items played a significant role.

This mismatch persisted into 2026, with Q1 posting an operating profit of KRW 0.49bn against a net loss of KRW -0.31bn, and Q2 showing both an operating loss of KRW -0.37bn and a net loss of KRW -0.33bn.

Revenue itself has shown a steadier upward trend on a quarterly basis, rising from KRW 28.85bn in Q2 2025 to KRW 34.99bn in Q1 2026 and KRW 34.65bn in Q2 2026, making the top-line recovery relatively clear even as profitability continues to swing with cost fluctuations.

Over the trailing four quarters (Q3 2025 through Q2 2026), net income attributable to owners totaled approximately KRW 3.89bn, indicating the annual profit trend has held even as individual quarters show considerable variance, underscoring the need to monitor earnings stability going forward.

Industry analysis

End demand for synthetic leather is closely tied to footwear and apparel sales at global sportswear brands and interior material demand from automakers, and this end market has recently shown diverging fortunes among major brands.

Nike remains the world's largest sportswear company by market share, but "matches are almost three years without growth,

Outlook

No specific medium- to long-term guidance, capacity expansion, or new order disclosures from the company were identified in this review.

That said, the steady quarter-on-quarter revenue growth since 2025 and the swing to positive operating cash flow can be read as facts supporting the view that the underlying business may have passed a trough.

On the other hand, the pattern of operating profit alternating between gains and losses has repeated from the second half of 2025 through the first half of 2026, leaving cost management and pricing power as key points to watch for profitability stabilization going forward.

The decline in the debt ratio from 263.9% in 2024 to 232.9% in 2025 can be interpreted as an early sign of balance-sheet improvement, though it remains well above the 109.6% level seen in 2022.

In the end market, shifting competitive dynamics among global sportswear brands continue, making the degree of customer diversification an important variable.

The wallpaper segment's performance is likely to remain closely tied to the domestic housing market cycle, and any expansion of the refining business would need to be confirmed through future disclosures.

Investors will need to monitor upcoming quarterly earnings releases and ownership-related filings, such as large shareholding reports, to track both the durability of the recovery and changes in shareholder composition.

Valuation

PER

3.7×

PBR

0.2×

ROE

6.3%

EPS

₩471

BPS

₩10,275

Dividend per share

₩0

Daewon Chemical trades at a considerable discount to book value, and the company appears not to have paid dividends in recent years, making dividend-related metrics of limited use for comparison.

Given the trajectory from three consecutive years of losses to a return to profit in 2025, market valuation appears to reflect ongoing assessment of earnings sustainability and quality, particularly the volatility of net income relative to cash generation.

The fact that the debt ratio remains above 200% is a factor that could be conservatively weighed in any assessment of the stock relative to net asset value.

With the mismatch between quarterly operating profit and net income continuing, valuation trends are likely to remain sensitive to whether future quarterly results show greater consistency.

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

Return to Profit Accompanied by Cash Flow Improvement

Operating cash flow improved sharply to KRW +3.54bn in 2025 from KRW -13.69bn in 2024, meaning the accounting return to profit was accompanied by an actual recovery in cash generation.

Revenue also edged up from KRW 125.9bn in 2024 to KRW 126.4bn in 2025, and both Q1 and Q2 2026 revenue continued to grow year-over-year. This suggests the underlying business may have passed its trough compared with the three consecutive loss years from 2022 to 2024.

Early Signs of Debt Ratio Improvement

The debt ratio eased from 263.9% in 2024 to 232.9% in 2025. Total equity also rose from KRW 41.9bn in 2024 to KRW 44.6bn in 2025, which can be interpreted as reflecting a partial contribution from the return to net profit.

If balance-sheet improvement continues, it could provide additional buffer in terms of funding costs and credit risk.

Regulatory Positioning Through the Environmental Refining Business

Daewon Chemical is understood to have long operated a business recovering and refining waste DMF generated during synthetic leather production.

Having maintained ISO14001 environmental management certification along with continued investment in air and wastewater treatment, the company appears relatively well positioned as regulation of chemical solvent recycling tightens. However, this segment's revenue scale is understood to be modest, limiting its impact on overall results.

Bear factors

Recurring Mismatch in Quarterly Profit and Loss

In Q3 2025, the company posted an operating profit of KRW 0.85bn but a net loss of KRW -2.13bn, while in Q4 2025 the reverse occurred, with an operating loss of KRW -0.76bn alongside a net profit of KRW 6.66bn.

This mismatch continued into Q1 and Q2 2026, with operating profit and net income either diverging in direction or both landing in loss territory. Such volatility points to a significant impact from non-operating items, making it difficult to assess the stability of core earning power.

Debt Ratio Remains Elevated

The debt ratio eased to 232.9% in 2025 but remains more than double the 109.6% level recorded in 2022. Total liabilities stood at KRW 103.8bn at the end of 2025, down somewhat from KRW 110.6bn in 2024, but the absolute scale remains large. Full normalization of the balance sheet may require additional time.

Exposure to End-Demand and Raw Material Prices

Synthetic leather revenue is linked to the footwear sales cycle of global sportswear brands and automaker production volumes, leaving the business exposed to swings in end-market conditions.

Amid ongoing market-share competition among major customers such as Nike and Adidas, heavy dependence on a specific brand could increase earnings volatility.

In addition, fluctuations in petrochemical feedstock prices directly affect the cost structure and are cited as one of the main drivers of quarterly margin swings.

Risk factors

Balance Sheet Risk

With the debt ratio continuing to exceed 200%, financial burden from changes in interest rate conditions or funding availability could be relatively significant. Equity fell to KRW 41.9bn in 2024, and if results were to deteriorate again, concerns about capital erosion could resurface. The durability of balance-sheet improvement will need to be confirmed over several more quarters.

Profitability Volatility Risk

The recurring pattern of operating profit and net income moving in different directions suggests a stable core profit structure has not yet been established. Given the apparently significant weight of non-operating items, confirming underlying profitability once one-off factors fade will be important. Margins could also swing considerably with raw material price or currency fluctuations.

End-Market Dependency Risk

If synthetic leather revenue is concentrated among a small number of global brands or automakers, weak performance or vendor changes at those customers could directly hit sales.

The wallpaper segment is exposed to the domestic housing cycle while the refining business is influenced by environmental regulatory direction, creating multi-layered exposure to external variables. Customer diversification and securing new sales channels remain key variables for mitigating this risk.

What to watch next

Mid-November 2026
Check the Q3 2026 quarterly report to see whether operating profit remains positive and whether the revenue growth trend continues.
March 2027
Review the 2026 annual audit report and business report for whether the annual profit trend continued, how the debt ratio trended, and whether dividend policy resumes.
Q4 2026
Given a large shareholding report was filed around June-July 2026, it is worth watching for any further ownership-related filings.
Around the November 2026 earnings release
Assess whether quarterly operating profit and net income move in the same direction and whether the weight of non-operating items declines, in order to judge the quality of earnings.

Overall view

Daewon Chemical turned both operating profit and net income positive on an annual basis in 2025, ending three consecutive years of losses from 2022 through 2024.

Operating cash flow also improved in tandem, meaning the accounting turnaround was accompanied by an actual recovery in cash generation — a fact that can be viewed positively.

On a quarterly basis, however, operating profit and net income have frequently diverged in direction, including a case in Q4 2025 where net income rose sharply despite an operating loss, warranting further confirmation of earnings quality and sustainability.

The debt ratio declined from 2024 levels but remains well above 200%, leaving balance-sheet normalization as an ongoing task. In the end market, shifting competitive dynamics among major customer brands such as Nike and Adidas continue, making customer diversification and vendor-status stability important variables.

Overall, the company sits at a stage where signs of improvement past a trough coexist with quarterly variance and balance-sheet burden, and the consistency of earnings over the coming quarters will likely be the key factor in gauging the credibility of the recovery.

Sources

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

Show 18 more articles and sources

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.