1. H1 2025 Performance: Profitability with Underlying Risks

TK Chemical reported revenue of KRW 92 billion, operating profit of KRW 400 million, and net income of KRW 48 billion for Q2 2025. While the substantial net income growth is noteworthy, it’s primarily attributed to KRW 94 billion in equity method gains from affiliates (SM Line & SM High Plus). This highlights the company’s dependence on external factors rather than core business improvements.

2. Business Segment Analysis: Strengths and Weaknesses

  • Chemicals (PET-Chip): While maintaining stable revenue, this segment remains vulnerable to fluctuations in oil prices, exchange rates, and Chinese oversupply.
  • Construction: Continuing losses in this segment are weighing down overall profitability.
  • Electronics (Touch Screen Panels): Losses have narrowed, but the segment faces intense competition and requires ongoing investment in technological advancements.

3. Key Considerations for Investors

Before investing in TK Chemical, consider the following crucial factors:

  • Future earnings outlook of affiliates
  • Potential for recovery in the construction segment
  • Maintaining competitiveness in chemicals and growth in new businesses
  • Impact of macroeconomic factors such as interest rate hikes and economic slowdown

4. Conclusion: Proceed with Caution

While TK Chemical’s return to profitability is a positive sign, questions remain about its sustainability. Given the reliance on affiliate performance, struggles in the construction segment, and vulnerability to external factors, investors should proceed with caution and conduct thorough due diligence.