Lotte Chemical cracks naphtha into base feedstocks such as ethylene and propylene, then processes them into plastic materials such as polyethylene, polypropylene, and PET, and this base chemicals business is the major axis of about ₩18.5 trillion in 2025 consolidated revenue; its results are heavily driven by the spread, the gap between crude and naphtha prices and product selling prices. In May 2026 it returned to profit in Q1, breaking the run of large losses in 2024-2025, and it is carrying out a reorganization toward high-value specialties, including spinning off the Daesan naphtha cracker with a target of launching an integrated entity in September, while keeping the dividend at ₩1,000 per share. The key points to watch are that its strengths are the nation's largest base-feedstock supply capacity, a deeply depressed valuation at a P/B of 0.22x, and a substantive return to profit - while, on the other side, the Q1 profit contains a one-off inventory-valuation effect, and global ethylene oversupply is expected to persist through 2027-2028, so a full spread recovery will take time.
At-a-glance assessment financial health · growth · profitability · valuation
- The most recent full-year net result was a loss.
- Revenue fell 7.1% year over year (3-year trend: mixed).
- Most recent quarter (Q1 2026) revenue was 1.8% higher than a year earlier.
- ROE is -16.2% (controlling-interest basis). It is below the sector average.
- Operating margin is -5.1%.
- The forward P/E sits above the sector median, reflecting elevated expectations.
Ownership & governance As of 2024-12-31
Largest shareholder Lotte Corporation 25.31% (corporate)
Controlling bloc incl. related parties 54.53%
With the controlling bloc holding 55%, control is very secure but the free float is thin.
🔎 In-depth analysis
- Lotte Chemical is a company that cracks naphtha, extracted from crude oil, into base feedstocks such as ethylene and propylene, then processes them into plastic materials such as polyethylene (PE), polypropylene (PP), and PET.
- The major axis of about ₩18.5 trillion in 2025 consolidated revenue is this base chemicals business (NCC, polyolefins, and the like), accounting for roughly half of the group's total revenue.
- Added to this are advanced materials, which handle engineering plastics for autos and electronics and battery materials; fine chemicals for semiconductors and pharmaceuticals (Lotte Fine Chemical); and Lotte Energy Materials, which makes copper foil.
- In other words, this company's core business is making the raw materials for plastics in large volumes and supplying them across industry, and so its results are heavily driven by the gap (the spread) between crude and naphtha prices and product selling prices.
- The latest close is ₩61,300 and the market cap is ₩2.6 trillion.
- The price sits below its 20-day line (₩69,260) and below its 60-day line (₩82,143).
- With the price below both its short- and mid-term moving averages, the trend looks subdued.
- The RSI (a supplementary gauge that scores upward versus downward momentum over the past 14 days on a 0-100 scale) is 34.5, near neutral.
- The one-month change is -18.2%, the three-month change is -30.3%, and it sits -48.0% below its 52-week high.
- Relative strength versus the KOSPI is 22 (on a 1-99 scale, computed from returns versus the index over the past year with more weight on recent performance; higher means stronger than the market).
- Among all stocks, it sits in roughly the top 78% by strength.
- Over the past three months it lagged the index by 46.1%.
- It is best to read the chart alongside trading volume and disclosure dates.
- On valuation, the P/E (how many times one year's net profit the share price is) cannot be calculated owing to the 2025 net loss; instead, the P/B (how many times book net assets the share price is) of 0.22x means it trades at about one-fifth of net assets.
- This level reflects both a cyclical trough and a strong market discount on asset value.
- On profitability, 2025 ROE (how much was earned in a year on equity) of -16.2% and an operating margin of -5.1% were weak, but this heavily includes one-off items such as large asset impairments in the course of the business reorganization.
- The debt ratio (debt relative to equity) of 107% is not low, as is typical for the chemical industry, but the company has cut borrowings via asset sales from ₩6.3 trillion in 2024 to about ₩4.5 trillion.
- It maintains a dividend yield of 1.55% (₩1,000 per share).
- The absent P/E from the 2025 loss and the seemingly high impairment burden are closer to traces of the last cycle's trough, and now that the earnings inflection has begun, the pace of the spread recovery ahead matters more.
- Revenue went from ₩18.1 trillion in 2021 to ₩22.3 trillion in 2022 to ₩19.6 trillion in 2023 to ₩19.9 trillion in 2024 to ₩18.5 trillion in 2025, declining gradually after the 2022 peak amid oversupply and softer demand (-7.1% year on year in 2025).
- The profit trajectory is more dramatic: operating profit swung from +₩1.54 trillion in 2021 to a loss in 2022, then -₩0.39 trillion in 2023, -₩0.91 trillion in 2024, and -₩0.94 trillion in 2025 - three straight loss years - while the net loss widened to -₩1.71 trillion in 2024 and -₩2.04 trillion in 2025 (including asset impairments).
- The inflection point is Q1 2026.
- With revenue of ₩4.99 trillion (+1.8% year on year), operating profit of +₩73.5 billion, and net profit of +₩33.5 billion, it returned to profit for the first time in 10 quarters.
- Base chemicals contributed +₩45.5 billion on a spread improvement from higher selling prices and a feedstock lagging effect, and advanced materials +₩61.5 billion as inventory adjustment ended and downstream demand recovered.
- That said, the company noted this improvement contains a one-off element - a positive inventory-valuation (lagging) effect from rising naphtha prices - and, since the global ethylene cycle is set to pass its trough and recover through 2027-2028, it is closer to the truth to view 2026 as an early recovery phase just off the bottom.
- This year's priority is therefore escaping losses and normalizing earnings rather than a large profit leap.
- The core narrative is escaping losses and reorganizing the business.
- A fair-disclosure filing on May 11, 2026 confirmed the Q1 return to profit, an event that broke the run of large losses in 2024-2025.
- On the structural side, the company spun off the Daesan naphtha cracker (NCC) business into a separate entity in early June (with a split-completion report on June 2) and aims to launch an integrated entity in September.
- This is part of a reorganization to trim commodity products and shift toward high-value specialties.
- In March there was a disclosure on halting production at some facilities (amended in May), and the Yeosu plant has also filed a business-reorganization plan.
- On the financial side, disclosures on lending, debt guarantees, and collateral to related parties and subsidiaries followed, showing active intra-group movement of funds and facilities during the reorganization.
- The dividend was kept at ₩1,000 per share, continuing the shareholder-return stance.
- From an observational standpoint, the strengths are clear: the nation's largest base-feedstock supply capacity, a deeply depressed valuation of 0.22x net assets, and a substantive return to profit in Q1 2026.
- If the reorganization - lowering the base-chemicals share from 50% to 30% by 2030 and shifting the center of gravity toward advanced materials, fine chemicals, and battery materials - proceeds as planned, earnings volatility could ease.
- The cautions are just as clear.
- The Q1 profit contains a one-off inventory-valuation effect from rising naphtha prices, so it is hard to annualize as is, and global ethylene oversupply is expected to persist through 2027-2028, so a full spread recovery will take time.
- The costs of the Daesan and Yeosu reorganization and facility box-ups can weigh on near-term scale and profit.
- In sum, it is strong under conditions where the naphtha-ethylene spread widens steadily and the reorganization finishes without cost overruns, and weak under conditions where a crude spike or renewed Chinese capacity additions push the spread down again.
- It suits this company's character to approach it by how much it is discounted to net asset value rather than by net profit.
🔎 Valuation vs peers Inconclusive
A comparison with domestic large-cap peers based on a pure petrochemical and diversified-chemical business mix.
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| LG Chem | 0.00x | 0.55x | -5.54% |
| Kumho Petrochemical | 9.68x | 0.45x | 4.66% |
| Hanwha Solutions | 0.00x | 0.58x | -7.15% |
Lotte Chemical has the lowest P/B among large-cap chemical peers (0.22x versus LG Chem 0.6, Kumho Petrochemical 0.47, and Hanwha Solutions 0.68), so on a net-asset basis it looks distinctly cheap. However, this discount also reflects the market's uncertainty over the large 2024-2025 losses and asset impairments and the ongoing reorganization costs. The 2025 net loss means the P/E cannot be calculated, and as an inflection stock whose earnings have only just turned positive, last year's profit-and-loss-based metrics do not explain the picture ahead well. Future earnings hinge on the pace of the naphtha-ethylene spread recovery, and with global ethylene oversupply expected to persist through 2027-2028, the recovery is likely to be gradual. With the asset appeal of a low P/B balanced against the uncertainty over the pace of the earnings recovery, one-off factors, and reorganization costs, it is more appropriate at this point to call it Inconclusive than to declare it undervalued.
Price history Close · MA20 · MA60
The latest close is ₩61,300 and the market capitalization is ₩2.6 trillion. The price sits below its 20-day moving average (₩69,260) and below its 60-day moving average (₩82,143). It is under both its short- and medium-term moving averages, so the trend looks subdued. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 34.5, a neutral level. The one-month change is -18.2%, the three-month change is -30.3%, and the position relative to the 52-week high is -48.0%. Relative strength versus the KOSPI is 22 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 22% of all stocks. Over the past three months it lagged the index by 46.1%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M -46.11% / 6M -45.42% / 12M -61.59%
Key metrics vs sector median
Valuation
A net loss makes the P/E an unreliable valuation gauge. The P/B of 0.21x is below the sector median (0.97x).
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate)
DCF (discounted cash flow) estimate — discount rate 9.8%, initial growth 4.0%→terminal 2.0%, 10-yr forecast, earnings-based. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is -16.2%, below the sector average (4.0%). The operating margin is -5.1%. The debt ratio is 107.2%, so the financial structure is moderate.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $13.0B | $13.2B | $12.3B | -7.10% ↓ slower |
| Operating profit | -$259.6M | -$606.1M | -$625.1M | — |
| Net profit | -$33.2M | -$1.1B | -$1.4B | — |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $12.0B | $14.8B | $13.0B | $13.2B | $12.3B |
| Operating profit | $1.0B | -$505.4M | -$259.6M | -$606.1M | -$625.1M |
| Net profit | $936.9M | $18.4M | -$33.2M | -$1.1B | -$1.4B |
| Revenue CAGR | 4-yr avg 0.50% | ||||
Revenue fell 7.1% year over year (2023 ₩19.6 trillion → 2024 ₩19.9 trillion → 2025 ₩18.5 trillion), and the three-year trend is 'mixed'. The rate of decline widened from the prior year. Operating results are in the red, so a swing back to profit matters more than the growth rate here. Over the 5 years on record, revenue compound annual growth (CAGR) is 0.5%. The two-year revenue CAGR is -2.8%. In the most recent quarter (Q1 2026), revenue was 1.8% higher than the same period a year earlier.
Latest quarterly results Q1 2026 · vs year-ago
Technical indicators
What stands out
- —
Points to watch
- The most recent full year was a loss, so it is worth checking whether profitability recovers.
- Revenue fell 7.1% year over year (3-year trend: mixed).
- The price is high versus peers, so expectations already appear priced in.
Recent news & events searched · sourced
- 2026-05-11EarningsQ1 2026 preliminary consolidated results: revenue of ₩4,990.5 billion, operating profit of ₩73.5 billion, net profit of ₩33.5 billion, a return to profit for the first time in 10 quarters. Both base chemicals and advanced materials profitable.An earnings inflection that broke the run of large losses in 2024-2025. That said, one-off factors such as the naphtha lagging (inventory-valuation) effect the company noted are partly included, so whether the trend persists depends on the spread from Q2 onward. Source
- 2026-06-02FilingSplit-completion report for the Daesan naphtha cracker (NCC) business spin-off. Separating commodity base chemicals into a distinct entity to prepare a September launch of an integrated entity.A key step in the medium- to long-term portfolio reorganization toward trimming commodities and shifting to high value. Near-term scale can shrink and reorganization costs can rise during the integration and facility adjustment. Source
- 2026-05-26FilingDisclosure on halting production at some facilities (an amendment to the initial March disclosure). Linked to the commodity-facility restructuring.A move to defend profit and loss by trimming low-margin facilities amid oversupply. Near term, production and revenue scale shrink. Source
- 2026-06-02FilingMultiple disclosures on lending, debt guarantees, and collateral to related parties and subsidiaries. Intra-group funding and facility support during the reorganization.Liquidity support underpinning the reorganization and integration. Group-level financial burden and the possibility of affiliate-risk contagion should be watched together. Source
Figure cross-check computed ↔ external
| Metric | Computed | External | Status | Source |
|---|---|---|---|---|
| Q1 2026 operating profit | ₩73.5 billion(base quarter op_income ₩73,478,150,850) | ₩73.5 billion | Confirmed | link |
| Q1 2026 revenue | 4₩990.5 billion(base quarter revenue ₩4,990,520,929,713) | 4₩990.5 billion | Confirmed | link |
| 2026 business reorganization (Daesan NCC spin-off) | 6 ·9 | NCC (2026-06-02), 9 | Confirmed | link |
| 2026 full-year net profit (outlook) | self-estimate approx. ₩100.0 billion | — | Unverified | — |
Recent filings
- 2026-06-02Disclosure
- 2026-06-02Disclosure
- 2026-06-02Merger decision
- 2026-06-02Disclosure
- 2026-06-02Disclosure
- 2026-06-02Amended filing
- 2026-06-01Corporate governance report
- 2026-05-29Large-business-group status disclosure
- 2026-05-26Amended filing
- 2026-05-15PeriodicQuarterly report
- 2026-05-11EarningsFair-disclosure notice
- 2026-04-30Shareholders' meeting notice
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
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