KOSPIChemicals120110

Kolon Industries

₩56,300▲ 2.18%2026-10-02 close

Market Cap

₩1.7T

Turnover

₩4.8B

Volume

90,000 shares

Shares out.

30M

PER

13.3×

PBR

0.4×

EPS

₩4,187

Dividend Yield

2.33%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,300 per share · Prices as of the 2026-10-02 close

Report overview

Core materials recover, new lines start: tracking the profit path

A recovery in core lines such as tyre cord and hydrocarbon resin, combined with the ramp-up of mPPO and CPI, drove a sharp first-half 2026 profit improvement; what remains is whether aramid clears break-even and whether the asset sale closes.

1
Second-quarter 2026 revenue was KRW 1.3565tn with operating profit of KRW 98.7bn, the highest quarterly operating profit of the last four quarters; first-half operating profit totalled KRW 160.7bn.
2
Full-year 2025 revenue was KRW 4.8734tn with operating profit of KRW 108.9bn (2.2% margin), the weakest margin in four years, and the fourth quarter of 2025 posted a net loss attributable to owners.
3
mPPO, a material for copper-clad laminates used in AI accelerators, more than doubles capacity with the Gimcheon Plant 2 expansion and enters full operation in the second half.
4
CPI film for foldables turned profitable on new overseas customers, and the company expects full utilisation from the third quarter.
5
The sale of the functional and imaging materials businesses (preferred bidder IMM PE) is still pre-definitive agreement, and aramid has yet to clear break-even despite full utilisation.

Business structure

Kolon Industries is the core manufacturing affiliate of the Kolon Group, organised around four pillars: industrial materials, chemicals, film and electronic materials, and fashion.

Industrial materials centre on tyre cord, airbag fabric and aramid, while chemicals rest on hydrocarbon resin, phenolic and epoxy resins and, more recently, modified polyphenylene oxide (mPPO). mPPO is used in copper-clad laminates for high-power AI chips and is regarded as offering three to five times better electrical insulation than conventional epoxy resin.

Aramid capacity more than doubled from 7,500 tonnes to 15,310 tonnes a year after the Gumi plant expansion was completed at the end of 2023, and aramid pulp for brake pads and gaskets was expanded at Gumi from 1,500 to 3,000 tonnes a year.

In tyre cord, industry tallies as of end-2023 put HS Hyosung Advanced Materials at about 51% global share and Kolon Industries at about 15%.

In film and electronic materials the flagship product is CPI for foldable displays; CPI is used in cover windows and protective films for folding displays, being lighter than glass and durable under repeated folding.

The fashion arm runs outdoor, golf and menswear brands, while a China brand venture is reflected through equity-method income.

The portfolio is still being reshaped: after winding down the loss-making PET film business, the company is pursuing the sale of overcoat, OLED encapsulation and dry film businesses and related stakes, and it had earlier merged in Kolon Glotech's automotive materials and parts business and Kolon ENP as part of efficiency measures.

Earnings trend

Quarterly revenue · Operating profit

₩1.3T₩45.3B25Q2₩1.2T₩26.9B25Q3₩1.2T₩9.8B25Q4₩1.2T₩61.9B26Q1₩1.4T₩98.7B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩5.4T₩242.5B2022₩5.1T₩157.6B2023₩4.8T₩158.7B2024₩4.9T₩108.9B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.3T	₩45.3B	3.6%
2025Q3	₩1.2T	₩26.9B	2.3%
2025Q4	₩1.2T	₩9.8B	0.8%
2026Q1	₩1.2T	₩61.9B	5.0%
2026Q2	₩1.4T	₩98.7B	7.3%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩5.4T	₩242.5B	₩179.8B	4.5%	6.9%	119.7%
2023	₩5.1T	₩157.6B	₩42.8B	3.1%	1.5%	104.9%
2024	₩4.8T	₩158.7B	₩98.6B	3.3%	2.7%	92.1%
2025	₩4.9T	₩108.9B	₩38.3B	2.2%	1.0%	89.0%

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

On an annual basis, revenue and margin were squeezed together: KRW 5.3675tn revenue and KRW 242.5bn operating profit (4.5% margin) in 2022, KRW 5.0612tn and KRW 157.6bn (3.1%) in 2023, KRW 4.8430tn and KRW 158.7bn (3.3%) in 2024, and KRW 4.8734tn and KRW 108.9bn (2.2%) in 2025.

Net profit attributable to owners fell to KRW 38.3bn in 2025 from KRW 98.6bn in 2024. Quarterly, operating profit slid from KRW 45.3bn in 2Q25 to KRW 26.9bn in 3Q25 and KRW 9.8bn in 4Q25, with a KRW 9.5bn net loss attributable to owners in the fourth quarter.

KB Securities noted in a May 2026 report that the fourth quarter of 2025 included aramid inventory valuation losses and scheduled maintenance at Kolon ENP.

In 2026, first-quarter revenue of KRW 1.2374tn and operating profit of KRW 61.9bn were followed by second-quarter revenue of KRW 1.3565tn and operating profit of KRW 98.7bn, so first-half operating profit of KRW 160.7bn already exceeded the full-year 2025 figure.

First-quarter 2026 net profit attributable to owners of KRW 74.2bn exceeded that quarter's operating profit, suggesting a sizeable non-operating contribution, though the detailed breakdown was not verified for this report.

By segment, first-half chemicals operating profit was reported at KRW 113.7bn versus KRW 59.1bn a year earlier, roughly doubling on wider hydrocarbon resin margins helped by raw-material lagging effects tied to the Middle East conflict, while the second quarter also benefited from a narrower aramid loss via operational efficiency projects and a semi-peak season in fashion.

Financially, operating cash flow rose to KRW 355.0bn in 2025 from KRW 290.6bn in 2024, and the debt-to-equity ratio fell from 119.7% in 2022 to 89.0% in 2025.

Combined net profit attributable to owners over the latest four quarters (3Q25 to 2Q26) was KRW 135.8bn, and the still-high volatility of quarterly earnings should be kept in view.

Industry analysis

End-market conditions turned clearly from the weakness of 2025 during the first half of 2026. The price of PET, the key tyre cord feedstock, rose more than 1.5 times in about six months, and passing that through to product prices lifted industry earnings.

Aramid had suffered from weak downstream markets such as communication cables and aggressive Chinese capacity additions, but demand began to rise as infrastructure investment revived those end markets.

Growth in North American optical cable plus automotive and ballistic demand pushed aramid to full utilisation and narrowed the second-quarter loss, yet higher input costs meant break-even was not reached.

On the competitive front, HS Hyosung Advanced Materials posted first-half 2026 revenue of KRW 1.7817tn and operating profit of KRW 112.0bn, up 5% and 3.9% year on year.

Kolon Industries' first-half operating profit of KRW 160.7bn was up 122.4% from KRW 72.2bn a year earlier, with revenue up 4.17% to KRW 2.5939tn, so the rebound was steeper than the peer's, though absolute profit and margin levels remain modest. The advanced-materials cycle runs on a separate clock.

The company expects the global mPPO market to more than double from roughly 4,600 tonnes in 2025 to about 9,700 tonnes by 2030. In aramid, the main rivals are Hyosung Advanced Materials, Taekwang Industrial and Huvis domestically, and DuPont, Toray Industries and Teijin Aramid overseas.

Outlook

Management's stated second-half levers are the mPPO capacity ramp, CPI full utilisation, and a higher mix of value-added industrial materials.

The mPPO facility at Gimcheon Plant 2 has completed mechanical construction and, after permitting, starts operating in the second half; it was built with about KRW 34bn of investment announced in June last year.

The expansion more than doubles mPPO capacity, and market estimates see mPPO revenue rising from around KRW 80bn in 2025 to KRW 130bn in 2026 and KRW 180bn in 2027. Supply is being expanded mainly to three Taiwanese CCL makers, with wider shipments to a domestic customer discussed for year-end.

On CPI, the company said full utilisation should be possible from the third quarter and that, at current capacity, full operation implies revenue of roughly KRW 200bn to 300bn.

In industrial materials, a plan is under way to add heat-setting equipment at the Vietnam tyre cord plant by 2027, lifting capacity from 36,000 to 57,000 tonnes a year, with investment held to about KRW 30bn by reusing equipment from an idled China plant.

On restructuring, the company signed an MOU with IMM PE on 13 July for the functional and imaging materials units, pursuing the transfer of the overcoat, OLED encapsulation and dry film businesses and related stakes, with proceeds earmarked for balance-sheet improvement and new-business investment.

However, observers note that because this is a carve-out of a division rather than a standalone entity, matters such as staff transfer, facility separation and IT systems must be settled before a definitive agreement and closing.

Brokerage reports published in August 2026 averaged a 2026 operating profit forecast of KRW 285.3bn and a 2027 average of KRW 307.8bn.

Valuation

PER

13.3×

PBR

0.4×

ROE

3.3%

EPS

₩4,187

BPS

₩142,256

Dividend per share

₩1,300

Price-based multiples are best read from the live figures on the screen card.

For reference, Yuanta Securities, in a July 2026 report, laid out a price-to-book band for the company of 0.3x at the low, 0.7x on average and 1.3x at the high, noting that the stock had historically traded above 1.0x when operating profit exceeded KRW 200bn.

The current multiple against net assets sits toward the lower part of that band, reflecting a phase in which the earnings decline through 2025 and the first-half 2026 recovery are both still being digested.

On target prices, Shinhan Securities said on 10 August 2026 that it maintained a Buy rating and raised its target price from KRW 88,000 to KRW 100,000, and Yuanta Securities maintained a target price of KRW 96,000 in July 2026 material. These are the brokerages' own views, not KOSAI's.

A cash dividend was paid for the most recent fiscal year, but given how sharply 2025 profit shrank, future dividend capacity may hinge on whether the earnings recovery persists.

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

Core-margin recovery is showing up in reported numbers

Operating profit of KRW 61.9bn in 1Q26 and KRW 98.7bn in 2Q26 already exceeds the KRW 108.9bn recorded for all of 2025. First-half chemicals operating profit nearly doubled to KRW 113.7bn from KRW 59.1bn, attributed to wider hydrocarbon resin margins from raw-material lagging effects.

In tyre cord, passing higher PET costs into prices also lifted industry-wide results. The move away from the loss-making fourth quarter of 2025 is an established fact.

Volume expansion in mPPO for AI substrates

Gimcheon Plant 2 completed mechanical construction in the second quarter, with the new line entering full operation in the second half after ramp-up, more than doubling capacity.

Supply is reported to be expanding mainly to three Taiwanese CCL makers. mPPO is an insulating material for high-performance boards used in AI chips and 6G equipment, applied to copper-clad laminates to reduce signal loss and heat. As long as AI server investment holds up, there is room for volume-led growth here.

CPI turning profitable alongside portfolio clean-up

Shinhan Securities said in August 2026 that CPI turned profitable for the first time since the facility was completed in 2018, driven by higher sales to a new overseas customer, with further gains expected from full utilisation in the third quarter.

The company said full operation at current capacity implies revenue of roughly KRW 200bn to 300bn.

At the same time, proceeds from the functional and imaging materials sale are earmarked for balance-sheet improvement and new-business investment, marking a shift that sheds low-return lines and concentrates resources on higher value-added products.

Bear factors

Aramid still loss-making despite full utilisation

Aramid reached full utilisation on stronger demand including North American optical cable and narrowed its second-quarter loss, but war-driven cost increases kept it below break-even, and converting the expanded capacity into stable profit is flagged as unfinished business.

Capacity reached 15,310 tonnes a year after the end-2023 expansion, but oversupply from Chinese producers then pushed prices down, turning the added capacity into a profitability burden. The longer it takes for that fixed-cost base to convert into profit, the slower company-wide margin repair is likely to be.

Reliance on lagging effects and input-cost volatility

Raw-material lagging effects tied to the Middle East conflict were cited as a driver of the first-half improvement in chemicals profit. Such effects can work in reverse and compress margins if feedstock prices move the other way.

Tyre cord likewise relies on passing surging PET costs into prices, so a downturn in feedstock prices could increase pricing pressure from customers. In short, part of the first-half margin rests on cycle factors.

Sizeable debt relative to earnings power

Total liabilities stood at KRW 3.6175tn at end-2025 against equity of KRW 4.0650tn, for a debt-to-equity ratio of 89.0%. That is down from 119.7% in 2022, but financing costs are not light relative to 2025 operating profit of KRW 108.9bn.

One analysis noted that roughly KRW 240bn spent on doubling aramid capacity kept investing cash flow in net outflow. The timing and size of divestment proceeds will shape how quickly the balance sheet improves.

Risk factors

Deal-closing risk

IMM PE has been granted exclusivity, with a definitive agreement to follow due diligence and detailed negotiation, so nothing is finalised yet. Because this is a corporate carve-out, observers note that staff transfer, facility separation and IT system set-up all need to be resolved.

Combined revenue of the two units being sold is reported to be in the KRW 200bn range. Any change in terms or delay would also push back the timing of balance-sheet repair and new-business investment.

End-demand and competition

Aramid is a market with a history of Chinese capacity additions, so price pressure could re-emerge if demand recovery stalls.

Competitors include Hyosung Advanced Materials, Taekwang Industrial and Huvis at home and DuPont, Toray and Teijin Aramid abroad. mPPO and CPI results also hinge on customer adoption and spec changes; rising adoption of ultra-thin glass in smartphones is one variable that could affect the composition of CPI demand.

Given the concentrated customer base typical of advanced materials, a single project delay can flow straight into quarterly results.

Litigation and non-recurring items

In June 2025 the Patent Court ruled in favour of HS Hyosung Advanced Materials in its invalidation suit over a hybrid tyre cord patent, overturning a 2023 Intellectual Property Trial and Appeal Board decision.

The two sides are also disputing the same patent in the United States, where HS Hyosung has filed an invalidation petition with the patent trial board.

Separately, non-recurring items such as inventory valuation losses and scheduled maintenance have swung quarterly profit sharply before, as in the fourth quarter of 2025. When reading quarterly figures, the nature and size of one-off items should be checked alongside.

What to watch next

Early to mid-November 2026
Third-quarter 2026 results. Since the company guided that CPI lines would run at maximum from the third quarter, the checkpoints are the scale of CPI revenue recognition, the first meaningful contribution from the new mPPO line, and the direction of aramid profit and loss.
During the fourth quarter of 2026
Whether a definitive agreement for the functional and imaging materials transfer is signed, and disclosure of the price and closing schedule. The company has said proceeds will be used for balance-sheet improvement and new-business investment, so the timing of the cash inflow will determine how fast net debt falls.
Around February 2027
Disclosure of full-year 2026 results and the dividend decision. This will show the extent of the annual profit recovery against 2025 operating profit of KRW 108.9bn, and whether higher earnings feed through to dividend policy.
Through 2027
Progress and start-up timing of the heat-setting expansion lifting Vietnam tyre cord capacity from 36,000 to 57,000 tonnes a year. Whether the added volume is absorbed without price erosion is key to industrial materials margins.
At each quarterly results release
The direction of hydrocarbon resin spreads and feedstock prices such as PET. Because part of the first-half chemicals profit gain rested on raw-material lagging effects, the point to watch is how the chemicals margin behaves when input costs move the other way.

Overall view

Kolon Industries passed through a stretch in which operating profit fell from KRW 242.5bn in 2022 to KRW 108.9bn in 2025, then posted two consecutive quarters of recovery in 2026 with KRW 61.9bn in the first quarter and KRW 98.7bn in the second.

The recovery rests on chemicals margins led by hydrocarbon resin, higher sales of industrial materials such as tyre cord and airbag fabric, and rising utilisation in the mPPO and CPI advanced-materials lines. mPPO capacity more than doubles with the Gimcheon Plant 2 expansion and enters full operation in the second half, and CPI was assessed as having turned profitable for the first time on new overseas customers.

On the other side sit aramid, still short of break-even despite full utilisation, chemicals margins that leaned on raw-material lagging effects, and an unfinished divestment that has yet to reach a definitive agreement.

Financially, the fall in the debt-to-equity ratio from 119.7% in 2022 to 89.0% in 2025 and the rise in 2025 operating cash flow to KRW 355.0bn provide a cushion, though the absolute debt load remains heavy relative to earnings power.

What matters over the coming quarters is whether advanced-materials volumes show up consistently in quarterly profit, whether aramid crosses into the black, and when divestment proceeds arrive. This report is for information only and contains no buy or sell recommendation 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.