KOSDAQChemicals281740

Lake Materials

₩12,610▲ 4.13%2026-10-02 close

Market Cap

₩824.9B

Turnover

₩11.2B

Volume

880,000 shares

Shares out.

65.7M

PER

53.2×

PBR

4.8×

EPS

₩208

Dividend Yield

0.27%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩30 per share · Prices as of the 2026-10-02 close

Report overview

Precursor Tech Strength Meets Thinner Margins

Lake Materials, the only domestic maker of trimethylaluminum (TMA), is expanding into new semiconductor materials, petrochemical catalysts, and solid-state battery materials, even as its operating margin has narrowed sharply over the past three years.

1
2025 revenue reached KRW 141.2 billion, up slightly year-on-year, but operating margin fell to 9.4% from 26.9% in 2022
2
The company holds the only domestic trimethylaluminum (TMA) manufacturing technology, with just four producers worldwide
3
In the semiconductor segment, new hafnium- and silicon-based precursors have begun contributing to revenue
4
Through a subsidiary, the company produces lithium sulfide, a key solid-state battery material, at 120 tons per year capacity, but competitors like Isu Specialty Chemicals are entering the market
5
In the first and second quarters of 2026, there was a notable gap between net income and operating income

Business structure

Lake Materials is a specialty materials company that develops and supplies ultra-high-purity precursors for semiconductor, solar, LED, petrochemical catalyst, and display applications based on organometallic compound design and synthesis technology.

The company develops and supplies ultra-high-purity organometallic compounds used as materials for semiconductors, solar, LED, metallocene catalysts, and displays, based on its organometallic compound design and trimethylaluminum (TMA) manufacturing technology.

Currently, the companies capable of producing TMA number just four worldwide, including Lake Materials, US-based Grace, AkzoNobel, and Germany's Lanxess.

In the semiconductor segment, ALD/CVD precursors for high-dielectric-constant (High-K) thin films are the core product, with major customers for semiconductor precursors including Samsung Electronics, SK Hynix, and Taiwan's TSMC.

The company holds the global number-one production position in LED and solar materials, with an estimated market share in the high-50-percent range for solar precursor materials.

The petrochemical catalyst segment produces metallocene catalysts and co-catalysts (MAO) and is expanding cooperation with large overseas customers.

More recently, building on its existing chemical process technology, the company has expanded into lithium sulfide for solid-state batteries, with subsidiary Lake Technology operating an annual production capacity of 120 tons and providing prototype samples to global cell makers currently under evaluation.

These precursor materials require consistent quality and stable supply, resulting in rigorous customer qualification processes and long-term trading relationships.

Earnings trend

Quarterly revenue · Operating profit

₩31.2B₩4.3B25Q2₩36.2B₩1.4B25Q3₩41.8B₩4.8B25Q4₩33.2B₩4.2B26Q1₩37.2B₩6.1B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩131.5B₩35.4B2022₩117.8B₩29.5B2023₩138.7B₩22.2B2024₩141.2B₩13.3B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩31.2B	₩4.3B	13.9%
2025Q3	₩36.2B	₩1.4B	3.8%
2025Q4	₩41.8B	₩4.8B	11.4%
2026Q1	₩33.2B	₩4.2B	12.8%
2026Q2	₩37.2B	₩6.1B	16.3%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩131.5B	₩35.4B	₩27B	26.9%	31.4%	146.0%
2023	₩117.8B	₩29.5B	₩24.1B	25.1%	22.0%	170.8%
2024	₩138.7B	₩22.2B	₩20.9B	16.0%	16.0%	167.4%
2025	₩141.2B	₩13.3B	₩7.7B	9.4%	5.7%	161.9%

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

Lake Materials' annual revenue declined from KRW 131.5 billion in 2022 to KRW 117.8 billion in 2023, before recovering to KRW 138.7 billion in 2024 and KRW 141.2 billion in 2025.

Operating profit, however, fell for four consecutive years, from KRW 35.39 billion in 2022 to KRW 29.53 billion in 2023, KRW 22.17 billion in 2024, and KRW 13.27 billion in 2025, pushing the operating margin down from 26.9% in 2022 to 9.4% in 2025.

Net income attributable to owners also dropped sharply, from KRW 27.01 billion in 2022 to KRW 7.69 billion in 2025.

On a quarterly basis, third-quarter 2025 revenue reached KRW 36.17 billion but operating profit was only KRW 1.38 billion, pushing the operating margin down to the low single digits, before margins rebounded quickly in the fourth quarter with revenue of KRW 41.84 billion and operating profit of KRW 4.78 billion.

First-quarter 2026 revenue was KRW 33.18 billion with operating profit of KRW 4.25 billion, yet net income attributable to owners reached KRW 6.35 billion, exceeding operating profit, suggesting non-operating factors boosted the bottom line that quarter.

Second-quarter 2026 revenue was KRW 37.21 billion with operating profit of KRW 6.08 billion (an operating margin of roughly 16.3%), the highest margin of the recent four-quarter window, though net income attributable to owners fell to KRW 2.53 billion, down from the prior quarter.

This pattern highlights that while revenue rose gradually over the most recent four quarters (Q3 2025 through Q2 2026), operating profit and net income swung considerably from quarter to quarter.

Combined net income attributable to owners over this window totaled roughly KRW 13.71 billion, already exceeding the full-year 2025 figure of KRW 7.69 billion.

Industry analysis

The semiconductor precursor market is driven by demand growth for high-dielectric-constant (High-K) materials tied to DRAM process shrinkage and the expansion of high-bandwidth memory (HBM).

One brokerage research note pointed to growth in legacy semiconductor production in China and rising HBM demand as key drivers for the semiconductor materials and petrochemical catalyst segments.

In the semiconductor segment, expanding adoption of atomic layer deposition (ALD) processes alongside process miniaturization is expected to support medium- to long-term demand growth.

The solar segment continues to see stable demand for TMA used in PERC cell processes, while the petrochemical catalyst segment is pursuing revenue diversification by expanding large overseas customers.

Competition in the solid-state battery materials market is intensifying rapidly: domestically, in addition to Lake Materials, Isu Specialty Chemicals and Jeongseok Chemical are developing lithium sulfide, and POSCO Holdings, which is nurturing battery materials as a future growth area, is reportedly considering investment as well.

In particular, Isu Specialty Chemicals is building out commercial-scale production through large-scale investment, raising the possibility of intensifying capacity competition ahead.

Organometallic materials generally carry high entry barriers due to lengthy customer requalification periods when switching processes, a factor that tends to favor incumbent suppliers.

Outlook

The company reportedly secured a new customer entry for hafnium-based precursors in its semiconductor segment, with three to four new materials including silicon-based precursors expected to contribute to revenue.

In the petrochemical catalyst business, discussions with major global players such as Saudi Arabia's SABIC and ExxonMobil in the United States have taken place, making continued overseas customer expansion a key point to monitor.

For lithium sulfide, the solid-state battery material, the company has reportedly completed production facility expansion as of its half-year report and is providing prototype samples for customer evaluation, though it has apparently not yet reached the stage of full commercial supply contracts.

Management has framed solid-state battery core materials and petrochemical catalysts as future growth pillars, outlining a medium-to-long-term diversification direction. The company's CEO has cited a three-year target of roughly KRW 250 billion in revenue and KRW 50 billion in operating profit.

However, achieving this target could depend on numerous external variables, including the pace of semiconductor industry recovery, the solid-state battery mass-production timelines of the three major battery makers, and the speed at which lithium sulfide competitors expand capacity.

The solar and petrochemical segments are each expected to see moderate growth supported by stable demand and new customer acquisition, respectively.

Valuation

PER

53.2×

PBR

4.8×

ROE

9.7%

EPS

₩208

BPS

₩2,311

Dividend per share

₩30

The current share price trades near the upper end of its historical range relative to recent earnings trends, and it also sits in a zone reflecting a meaningful premium to net asset value.

This can be interpreted as the market pricing in expectations for a business structure in which multiple growth businesses—new semiconductor materials, petrochemicals, and solid-state battery materials—are advancing simultaneously.

However, given that operating margin has clearly trended lower over the past three to four years, the key question is how to view the gap between the valuation level and the actual pace of profitability recovery.

On the dividend front, the company continues to pay cash dividends, though the yield itself is on the lower side relative to the industry average.

Ultimately, the current valuation can be seen as having priced in a substantial degree of market confidence in the growth narrative, and how to weigh that is left to individual investors.

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

Monopolistic TMA Technology and High Entry Barriers

The company is the only domestic maker of trimethylaluminum (TMA), with just four producers worldwide including Lake Materials, US-based Grace, AkzoNobel, and Germany's Lanxess.

Organometallic materials carry high entry barriers due to lengthy customer requalification periods when switching processes, which tends to favor incumbent suppliers in maintaining stable trading relationships.

This technological edge is leveraged across multiple end markets including semiconductors, solar, and petrochemicals.

Expanding Contribution from New Semiconductor Materials

A new customer entry for hafnium-based precursors has reportedly been secured, with additional new materials such as silicon-based precursors expected to contribute to revenue going forward.

Analysis suggests semiconductor materials and petrochemical catalysts will drive top-line growth, citing rising legacy semiconductor production in China and increasing HBM demand as growth factors.

The structural trend of increasing High-K thin-film adoption amid continued process miniaturization is also a favorable factor.

Diversified New Growth Business Portfolio

Through subsidiary Lake Technology, the company produces lithium sulfide, a core solid-state battery material, at 120 tons per year and provides prototype samples to global cell makers.

In the petrochemical catalyst business, cooperation discussions with major global players such as SABIC and ExxonMobil have taken place, opening potential for expanded overseas revenue.

Beyond semiconductors, the company holds multiple business pillars spanning solar, LED, and petrochemical catalysts, giving it a structure with relatively lower dependence on any single industry cycle.

Bear factors

Four Consecutive Years of Declining Operating Margin

Operating margin declined for four consecutive years, from 26.9% in 2022 to 25.1% in 2023, 16.0% in 2024, and 9.4% in 2025. Despite gradual revenue growth, profit levels fell by more than half, suggesting structural changes in profitability related to product mix, costs, or utilization rates.

Recent quarterly results also showed operating margin dropping to the low single digits in at least one quarter, underscoring significant quarter-to-quarter volatility.

Risk of Delayed Solid-State Battery Commercialization

The solid-state battery mass-production targets of the three major domestic battery makers are generally set for 2027 or later, meaning meaningful revenue contribution from the lithium sulfide business could be delayed.

As of the half-year report, the business remains at the prototype sample and customer evaluation stage, suggesting formal mass-production contracts may still be some time away. If downstream customers' development pace lags expectations, this could lead to lower capacity utilization.

Intensifying Competition in Lithium Sulfide

Domestically, in addition to Lake Materials, Isu Specialty Chemicals and Jeongseok Chemical are developing lithium sulfide, with Isu Specialty Chemicals building a commercial production system through large-scale investment designed to expand capacity to as much as 500 tons in the future.

POSCO Holdings is also reportedly considering related investment, raising the possibility that first-mover advantages could be diluted. If competitors accelerate capacity expansion, pricing and market-share pressure could intensify.

Risk factors

Downstream Industry Cycle Risk

The semiconductor segment relies heavily on a small number of large customers such as Samsung Electronics, SK Hynix, and TSMC, meaning changes in these customers' inventory adjustments or capital expenditure schedules can directly affect performance.

It has been noted that a global economic downturn would immediately impact the company through contraction in downstream industries. The solar and petrochemical segments are each exposed to their own respective downstream cycles, adding compounded sources of variability.

New Business Commercialization Delay Risk

Lithium sulfide for solid-state batteries remains at the sample evaluation stage, making the timing of formal mass-production contracts uncertain, with the possibility that revenue generation could be delayed due to slower-than-expected development pace among downstream customers.

Securing new petrochemical catalyst customers could also be delayed relative to plan depending on negotiation progress. If new business revenue contribution is delayed, reliance on the recovery pace of existing business margins increases.

Valuation Reflecting High Growth Expectations

There is an assessment that current valuation has already priced in a substantial degree of expectations for multiple growth businesses, including new semiconductor materials and solid-state batteries.

Given these elevated growth expectations, it is worth noting that share price volatility could increase if quarterly results fall short of expectations or if new business timelines are delayed.

The recent widening gap between operating profit and net income in certain quarters also adds to the uncertainty in forecasting future performance.

What to watch next

Around November 2026
Third-quarter 2026 earnings disclosure will be a key point to check whether new semiconductor materials (hafnium- and silicon-based) are contributing to revenue and whether operating margin is recovering.
Second half of 2026 through early 2027
It will be important to continue monitoring the results of customer evaluations for lithium sulfide used in solid-state batteries and whether formal mass-production contracts are signed.
Fourth quarter of 2026
This will be a period to check whether new volume supply actually commences to large overseas petrochemical catalyst customers such as SABIC and ExxonMobil.
Fourth quarter of 2026
It will be necessary to jointly check whether the expanded TMA production line's utilization rate normalizes, alongside demand trends in the solar and petrochemical segments.

Overall view

Lake Materials has built a diversified business portfolio spanning semiconductors, solar, petrochemicals, and solid-state batteries, underpinned by its status as the only domestic maker of TMA.

Revenue showed gradual growth between 2022 and 2025, but operating margin declined for four consecutive years from 26.9% to 9.4%, and the most recent four quarters (Q3 2025 through Q2 2026) repeatedly showed a widening gap between operating profit and net income.

In the semiconductor segment, new hafnium- and silicon-based materials have begun contributing to revenue, the petrochemical catalyst business is expanding large overseas customers, and lithium sulfide for solid-state batteries remains at the customer evaluation stage.

Competition in the lithium sulfide market is increasing with entrants such as Isu Specialty Chemicals, making it a key point to watch how long any first-mover advantage can be sustained.

Valuation appears to reflect a substantial degree of market expectation for these growth businesses, and the pace of operating margin recovery along with the timing of new business revenue contribution are likely to be key variables in upcoming quarters.

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.