1. Kosmo Chemical H1 2025 Performance: Initial Investment Burden in Battery Recycling

Kosmo Chemical reported weak H1 2025 results with revenue of KRW 177 billion, an operating loss of KRW 4.7 billion, and a net loss of KRW 4.1 billion. The main factors contributing to this were increased initial investments and operating costs in the battery recycling business, and decreased production in the advanced materials segment.

2. Battery Recycling: Future Growth Engine, but Uncertainties Remain

Kosmo Chemical is aggressively investing in battery recycling, aiming for nickel 9,000 tons/year, cobalt 2,800 tons/year, and lithium carbonate 3,500 tons/year production capacity. While this aligns with the growing EV market and offers high growth potential, challenges remain, including intensifying competition, securing scrap battery supply, and potential government policy changes.

3. TiO2 Business: Striving for Profitability with High-Value Strategy

Kosmo Chemical is pursuing profitability improvements by strengthening its high-value specialty TiO2 product lineup. The rising EUR/KRW exchange rate is also a positive factor. However, global economic slowdown, US-China trade disputes, and lower production capacity compared to competitors are hurdles to overcome.

4. Advanced Materials: Short-term Demand Slowdown, Long-term Growth Intact

Kosmo Advanced Materials’ secondary battery cathode materials and functional film business are expected to grow in the long term. However, the recent ‘chasm’ phenomenon in the cathode materials market poses a short-term demand slowdown risk. Strengthening the value chain through internalizing precursors is a positive development.

5. Financial Health: High Debt Ratio, Funding Strategy is Crucial

With a consolidated debt-to-equity ratio of 103.05% and a net debt-to-equity ratio of 67.95%, managing financial soundness is crucial. Kosmo Chemical is working to secure financial flexibility by extending debt maturities and discussing new financing. The high interest rate environment adds to the interest expense burden.

6. Investor Action Plan: Balancing Growth Potential and Risks

  • Positive Factors: Battery recycling, high-value TiO2, and advanced materials growth
  • Risk Factors: Continued operating losses, high debt ratio, raw material price volatility

Investing in Kosmo Chemical requires a balanced consideration of growth potential and risks. Closely monitor the success of its battery recycling business, high-value product expansion strategy, and improvements in financial health.