Korea Stock Market Insights

Tag: Sulfuric Acid

  • Capro Q2 2025 Earnings Analysis: New Business Potential or Delisting Risk?

    Capro’s Q2 Performance: What Happened?

    Capro recorded KRW 12.3 billion in revenue in Q2 2025, demonstrating a new revenue stream following the shutdown of its legacy businesses. This revenue comes from its new hydrogen and sulfuric acid businesses, offering a glimpse into the potential of its diversification strategy. However, the company continues to report losses, with an operating loss of KRW 9.4 billion and a net loss of KRW 11.7 billion. This is attributed to increased investment costs in new businesses and losses related to the withdrawal from existing operations.

    Analyzing the Persistent Losses: Why These Results?

    Capro’s continued losses can be attributed to three main factors. First, the discontinuation of its core caprolactam and ammonium sulfate businesses created a revenue gap. Second, increased investment costs in its new hydrogen and sulfuric acid businesses impacted profitability. Third, high debt-to-equity ratio and reliance on borrowing led to a significant interest expense burden. This weakens the financial structure and increases the risk of delisting.

    Capro’s Future: What Lies Ahead?

    While Capro has shown potential for growth through its new businesses, significant uncertainties remain. The company needs to address three key challenges: achieving stable revenue growth in new businesses, improving its financial structure, and mitigating the risk of delisting. On a positive note, the change in major shareholder and external investment indicate efforts to improve financial stability, and the conclusion of the workout process provides a foundation for normalization.

    Action Plan for Investors

    Investing in Capro carries a very high risk. If you’re considering an investment, carefully evaluate the following:

    • Growth potential of new businesses: Analyze the competitiveness and growth potential of the hydrogen and sulfuric acid businesses.
    • Financial structure improvement: Monitor improvements in financial indicators such as debt-to-equity ratio and reliance on borrowing.
    • Delisting risk: Continuously monitor public announcements and news related to the delisting risk.

    Instead of aggressive investment, a prudent approach involves carefully observing the company’s recovery process before making any investment decisions.

    Frequently Asked Questions

    Why does Capro continue to report losses?

    The main reasons are decreased revenue due to the discontinuation of existing businesses, increased investment costs in new businesses, and higher interest expenses due to a high debt ratio.

    Is there a possibility of Capro being delisted?

    Capital impairment and a disclaimer of opinion from the auditor at the end of 2023 triggered delisting criteria, and the status of its listing remains uncertain.

    What are Capro’s new businesses?

    Capro is pursuing diversification by discontinuing existing operations and focusing on hydrogen and sulfuric acid businesses.

  • Miwon Chemical (134380) H1 2025 Earnings Report Analysis: Poor Performance, What’s the Investment Strategy?

    1. Miwon Chemical H1 2025 Performance Analysis

    Miwon Chemical reported sales of KRW 134.3 billion, operating profit of KRW 15.24 billion, and net income of KRW 11.79 billion for the first half of 2025. These figures represent a year-on-year decrease of 5.2%, 46.8%, and 57.4%, respectively. Earnings per share (EPS) also declined by 55.6% to KRW 5,871.

    2. Factors Contributing to the Decline

    The decline in performance is attributed to a combination of factors, including decreased sales in the milling and sulfuric acid segments, rising raw material prices, and increased selling, general, and administrative expenses. A significant increase in alcohol-based raw material prices (58.7%) led to a rise in the cost of goods sold ratio to 70.9%. While the surfactant segment saw a slight increase in sales, it wasn’t enough to offset the overall decline.

    3. Investment Strategy and Considerations

    Miwon Chemical’s performance challenges may persist due to ongoing uncertainties, such as rising raw material prices and economic slowdown concerns. Investors should carefully consider the potential for future performance improvement and associated risks. The lack of market expectation data further emphasizes the need for cautious investment decisions.

    Miwon Chemical Investment FAQs

    Q1. What are Miwon Chemical’s main businesses?

    Miwon Chemical is a fine chemical company that produces surfactants, milling products, and sulfuric acid.

    Q2. Why were H1 2025 earnings disappointing?

    The decline is attributed to a combination of decreased sales in certain segments, increased raw material prices, and higher operating expenses.

    Q3. Is Miwon Chemical a good investment?

    The company’s performance challenges may persist, so investors should proceed with caution. Thorough analysis of market conditions and the company’s future outlook is crucial before making any investment decisions.