KOSPIRetail & Consumer128820

Daesung Industrial

₩4,145▲ 1.10%2026-10-02 close

Market Cap

₩189.1B

Turnover

₩200M

Volume

60,000 shares

Shares out.

45.2M

PER

—

PBR

0.2×

EPS

-₩1,285

Dividend Yield

2.89%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩120 per share · Prices as of the 2026-10-02 close

Report overview

Daesung Industrial: Energy-Retail Hybrid Faces Earnings Volatility

Daesung Industrial, which spans petroleum retail, city gas, and power generation, posted three straight years of revenue decline and a large 2025 net loss that widened the gap between operating profit and bottom-line results.

1
Consolidated revenue shrank for three straight years, from KRW 1.8713 trillion in 2022 to KRW 1.5659 trillion in 2025
2
Operating margin fell from 2.6% in 2022 to 0.7% in 2025, reflecting cost and competitive pressure
3
The 2025 net loss attributable to owners reached KRW 60.9 billion, diverging sharply from a KRW 10.8 billion operating profit
4
Net profit swung to KRW 10.7 billion in Q1 2026 before slipping back to a small loss in Q2 2026, underscoring quarterly volatility
5
The debt-to-equity ratio eased gradually from 191.0% in 2022 to 169.0% in 2025

Business structure

Daesung Industrial traces its roots to Daesung Industrial Corporation founded in 1947, was spun off as a separate entity in 2010, and merged with Daesung Holdings in 2017 to form its current governance structure.

The company has 20 consolidated subsidiaries, with operations spanning petroleum and gas retail, power generation, environmental energy equipment, and real estate.

Its petroleum and gas segment operates as GS Caltex's largest general agency, running gas stations and charging facilities while pursuing complex-station development, expanded leased stations, and self-service conversion to boost sales.

The power generation segment produces electricity, heat, and steam from LNG-based district energy facilities, supplying nearby industrial complexes and the power exchange.

The energy equipment segment manufactures and sells eco-friendly boilers and heat pumps, and in 2024 the company established a subsidiary for the D-Cube district cooling and electricity business to broaden its footprint.

Its city gas subsidiary, Daesung Energy, supplies gas to the Daegu and Gyeongbuk regions, with roughly 94% of that subsidiary's consolidated revenue coming from the city gas segment, providing a relatively stable earnings base.

D-Cube City in Sindorim, Guro-gu, Seoul, is a mixed-use retail, hotel, and cultural complex that anchors the real estate portfolio. The combination of traditional energy distribution, eco-friendly equipment, and real estate assets defines the company's diversified business mix.

Earnings trend

Quarterly revenue · Operating profit

₩372.3B-₩500M25Q2₩350.3B₩3.6B25Q3₩426.8B-₩6.5B25Q4₩412.6B₩21.8B26Q1₩365.9B₩2.9B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩1.9T₩48.3B2022₩1.6T₩29.4B2023₩1.5T₩21.8B2024₩1.6T₩10.8B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩372.3B	-₩500M	−0.1%
2025Q3	₩350.3B	₩3.6B	1.0%
2025Q4	₩426.8B	-₩6.5B	−1.5%
2026Q1	₩412.6B	₩21.8B	5.3%
2026Q2	₩365.9B	₩2.9B	0.8%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩1.9T	₩48.3B	-₩9.6B	2.6%	−1.6%	191.0%
2023	₩1.6T	₩29.4B	-₩4B	1.8%	−0.7%	182.5%
2024	₩1.5T	₩21.8B	₩6.5B	1.5%	1.1%	171.9%
2025	₩1.6T	₩10.8B	-₩60.9B	0.7%	−9.7%	169.0%

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

Earnings analysis

Consolidated revenue moved from KRW 1.8713 trillion in 2022 to KRW 1.6081 trillion in 2023, KRW 1.4768 trillion in 2024, and KRW 1.5659 trillion in 2025.

Operating profit contracted for four straight years, from KRW 48.3 billion in 2022 to KRW 29.4 billion in 2023, KRW 21.8 billion in 2024, and KRW 10.8 billion in 2025, with operating margin falling from 2.6% to 1.8%, 1.5%, and 0.7% over the same period.

Notably, despite posting a positive operating profit of KRW 10.8 billion in 2025, the company recorded a net loss attributable to owners of KRW 60.9 billion, a stark divergence between operating results and the bottom line.

On a quarterly basis, the Q4 2025 operating loss of KRW 6.5 billion and net loss of KRW 47.7 billion were the core drivers of the annual deficit, following weakness in Q3 2025 (net loss of KRW 8.1 billion) and Q2 2025 (net loss of KRW 15.4 billion).

By contrast, Q1 2026 showed a strong rebound with operating profit of KRW 21.8 billion and net profit of KRW 10.7 billion, likely reflecting seasonal peak demand for city gas.

However, Q2 2026 operating profit narrowed to KRW 2.9 billion and net profit slipped back into a small loss of KRW 0.6 billion, extending the pattern of quarterly volatility.

Over the most recent four quarters (Q3 2025 through Q2 2026), combined net profit attributable to owners totaled a loss of KRW 45.7 billion, worse than any single annual figure in the dataset.

Despite this volatility, operating cash flow stayed positive every year, at KRW 41.9 billion in 2022, KRW 66.9 billion in 2023, KRW 51.1 billion in 2024, and KRW 37.8 billion in 2025, indicating that cash generation held up independently of bottom-line swings. The debt-to-equity ratio eased gradually from 191.0% in 2022 to 169.0% in 2025.

Industry analysis

The city gas business is a regulated industry in which final tariffs are set based on wholesale rates announced by Korea Gas Corporation and retail supply costs determined by local governments, with a cost pass-through mechanism that reflects raw material cost changes in tariffs.

Subsidiary Daesung Energy holds an effectively exclusive position supplying city gas to the Daegu and Gyeongbuk regions, and on a cumulative nine-month 2025 basis it posted 5.2% revenue growth, 134.0% operating profit growth, and 102.4% net profit growth year over year, diverging from the parent's consolidated trend.

By contrast, Daesung Industrial's overall consolidated results for the same period showed 3.6% revenue growth alongside a 15.1% decline in operating profit and a swing to a net loss, reflecting weakness in the non-city-gas segments such as petroleum retail and power generation.

The petroleum product distribution business faces persistent price competition among refiners, driving continued cost-reduction efforts through facility modernization, sales network expansion, and conversion to self-service stations.

The power generation (district electricity) segment is benefiting from a phase of rising infrastructure demand amid government policy favoring distributed power sources and the use of LNG as a bridge fuel.

The eco-friendly boiler and heat pump market is expected to see intensifying competition for early market positioning as mandatory installation of eco-friendly condensing boilers under air quality improvement regulations drives replacement demand.

The company's diversified portfolio spanning city gas, petroleum distribution, power generation, and environmental equipment provides some cushioning against swings in any single business cycle.

Outlook

The petroleum and gas segment continues to pursue a growth strategy centered on complex-station development, expanded leased stations, and conversion to self-service outlets.

The power generation segment is expected to see continued infrastructure demand growth from expanding LNG-based generation and heat supply, a growth axis tied to the company's existing business base.

The energy equipment segment is likely to see intensifying competition for early positioning in the replacement market as environmental regulations mandate condensing boiler installations.

The district cooling and electricity subsidiary established in 2024 under the D-Cube business has potential to become a new growth driver, though the timing and scale of its revenue contribution require confirmation through future disclosures.

The city gas subsidiary, Daesung Energy, is likely to maintain a relatively predictable earnings stream thanks to its cost pass-through mechanism and stable retail supply cost structure, potentially serving as a stabilizing anchor for consolidated results.

However, if margin pressure in the non-city-gas segments (petroleum distribution and power generation) persists, overall consolidated earnings volatility may not easily resolve.

Whether the strong Q1 2026 net profit rebound was a temporary seasonal effect or a signal of structural improvement will need to be assessed over the coming quarters of reported results.

Valuation

PER

—

PBR

0.2×

ROE

-7.5%

EPS

-₩1,285

BPS

₩16,779

Dividend per share

₩120

Daesung Industrial's shares trade at a meaningful discount to book value per share, meaning market value sits well below net asset value.

With net profit attributable to owners over the most recent four reported quarters in loss territory, conventional earnings-based valuation multiples are difficult to apply, a reflection of the large 2025 net loss and quarter-to-quarter earnings volatility.

The company has a history of maintaining annual cash dividends, but with profitability fluctuating, the sustainability and size of future dividends may hinge on the trajectory of upcoming results.

The gradual multi-year improvement in the debt-to-equity ratio is a relevant financial stability data point, though it does not by itself indicate whether the current share price level is appropriate.

Ultimately, valuing this stock requires weighing the stable cash generation of the city gas subsidiary against the recovery prospects of the more volatile petroleum distribution and power generation segments.

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

Bull factors

Stable Cash Generation from the City Gas Subsidiary

City gas subsidiary Daesung Energy has a relatively predictable earnings stream thanks to the cost pass-through mechanism and locally determined retail supply cost structure.

On a cumulative nine-month 2025 basis, its revenue, operating profit, and net profit all grew by double digits or more, acting as a support for consolidated results. With roughly 94% of that subsidiary's revenue coming from the city gas segment, its earnings stability can partly offset consolidated-level risk.

Consistent Operating Cash Flow

Even though net income on the income statement posted losses in several years, operating cash flow remained positive every year from 2022 through 2025. This suggests non-cash charges or one-off items may have weighed on the final net loss figures, while the underlying business retained its cash-generating capacity. This cash flow appears to have contributed to the gradual improvement in the debt-to-equity ratio.

Expansion into Eco-Friendly and Distributed Energy Businesses

The D-Cube district cooling and electricity subsidiary established in 2024, along with the eco-friendly condensing boiler and heat pump business, targets replacement demand from tightening regulations and benefits from distributed power policy.

The power generation segment is in a phase of rising infrastructure demand amid expanding LNG-based generation and heat supply. This diversified new business portfolio has potential to partly offset stagnation in the traditional energy distribution business.

Bear factors

Shrinking Revenue and Declining Operating Margin

Consolidated revenue fell for three straight years, from KRW 1.8713 trillion in 2022 to KRW 1.5659 trillion in 2025. Operating margin also declined for four consecutive years, from 2.6% to 0.7%, reflecting sustained profitability pressure.

Intensifying competition in the petroleum distribution and power generation segments is cited as a key driver of this trend.

Large Divergence Between Operating Profit and Net Profit

In 2025, despite an operating profit of KRW 10.8 billion, the net loss attributable to owners reached KRW 60.9 billion, illustrating a structure where operating results alone cannot explain the bottom line. Q4 2025 alone contributed a net loss of KRW 47.7 billion, driving the annual deficit.

The specific causes of this divergence would require further confirmation through footnotes in the business report.

High Quarterly Earnings Volatility

Across the five quarters from Q2 2025 through Q2 2026, net profit direction shifted frequently: loss, loss, a large loss, a profit, then a small loss again. The combined net profit over the most recent four quarters totaled a loss of KRW 45.7 billion, worse than any single annual figure. This volatility raises uncertainty in forecasting future results.

Risk factors

Raw Material and FX Risk

LNG, the raw material for city gas, is imported from countries including Indonesia, Russia, Qatar, Australia, Oman, and the United States, with wholesale rates recalculated every two months based on exchange rates and oil prices.

Even with a cost pass-through mechanism in place, adjustment lags and consumer resistance can affect margins. Petroleum product distribution margins are similarly influenced by international oil prices and competitive dynamics among refiners.

Regulatory and Policy Risk

City gas retail supply costs are set by local governments and can change once a year, typically on July 1, creating margin variability tied to policy decisions.

Changes in environmental regulations such as mandatory eco-friendly boiler installation can create new demand while also intensifying competition, which may pressure margins. The power generation (district electricity) segment is likewise exposed to changes in electricity market regulations.

Financial Structure and Earnings Uncertainty

While the debt-to-equity ratio has been improving, it remains elevated at 169%, leaving some financial burden from interest expenses.

The recurring large gap between operating profit and net income suggests the influence of non-operating factors such as equity-method gains or losses, asset revaluations, or one-off impairments, adding uncertainty to future earnings forecasts.

The wide swings in quarterly results may stem from seasonality in specific business units or non-recurring items, warranting continued monitoring.

What to watch next

Around November 2026
The Q3 2026 earnings disclosure will show whether the seasonal transition in city gas demand and any recovery in non-city-gas segments materialize.
Around March 2027
The annual general shareholders' meeting and the 2026 business report will reveal the dividend policy, confirmed annual results, and details behind the operating-versus-net-income divergence.
Around July 1, 2027
Whether Daegu city adjusts the annual retail supply cost for city gas should be checked for its impact on Daesung Energy's margins.
At the next semiannual or annual business report disclosure
Whether the D-Cube district cooling and electricity subsidiary established in 2024 begins contributing measurable revenue should be confirmed via upcoming disclosures.

Overall view

Daesung Industrial is a diversified energy company spanning city gas, petroleum distribution, power generation, and eco-friendly equipment, with the stable cash generation of city gas subsidiary Daesung Energy serving as a support for consolidated results.

However, on a consolidated basis revenue declined for three straight years and operating margin fell for four consecutive years, and in 2025 the company posted a net loss attributable to owners of KRW 60.9 billion despite a positive operating profit, a significant divergence.

Quarterly results shifted direction frequently from Q2 2025 through Q2 2026, with the combined net profit over the most recent four quarters also in loss territory, leaving high uncertainty in earnings forecasting.

On the other hand, operating cash flow remained positive over multiple years and the debt-to-equity ratio improved gradually, offering some stabilizing signals in the underlying financial base.

Key points to watch going forward include whether the non-city-gas segments recover, when the new district cooling and electricity business begins contributing revenue, and clarification of the recurring gap between operating profit and net income. Investors should weigh these bullish and bearish factors comprehensively.

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.