KG Chemical Q2 Earnings Analysis: Maintaining Solid Growth

KG Chemical maintained solid performance in Q2 2025, recording sales of KRW 21,812 billion, operating profit of KRW 788 billion, and net profit of KRW 581 billion. They are also focusing on enhancing shareholder value through the complete cancellation of treasury stock.

Shareholder Return Policy and Minority Shareholder Activism: Winds of Change to Watch

KG Chemical has implemented 84.48% of its planned treasury stock acquisition and cancelled all of it. This is a positive factor as it increases the value per share by reducing the number of outstanding shares. Also, minority shareholder proposals, such as requests for shareholder meetings, proposals for increased treasury stock purchases/dividends, and inquiries about new businesses, are actively being made. This could lead to improvements in corporate governance and communication with shareholders.

Macroeconomic Uncertainty: Potential Risk Factors

However, we cannot only focus on the positive aspects. Volatile exchange and interest rates are potential burdens on KG Chemical’s financial soundness. Fluctuations in the KRW/USD exchange rate around 1,380, the KRW/EUR exchange rate around 1,600, the US base rate between 4.50-5.50%, the Korean base rate between 2.50-3.50%, and international oil price volatility are important factors to consider when investing.

Investment Strategy: Wait and See, Then Proceed with Caution

KG Chemical is showing solid performance and efforts to enhance shareholder value, but macroeconomic uncertainties pose a risk. Therefore, it is advisable to wait and see further performance improvements and changes in the macroeconomic environment. Making investment decisions while consistently monitoring quarterly earnings, management’s response to shareholder proposals, global interest rate and exchange rate trends, and new business performance is recommended.