Semiconductor materials growth expected to offset QD materials weakness; Goldman Sachs maintains Buy rating on Hansol Chemical

Overview

This report evaluates Hansol Chemical's 2Q26 results, the growth outlook for each materials business, and changes to earnings forecasts. Goldman Sachs believes QD display materials will remain a headwind, but growth in semiconductor and battery materials will become a more important profit driver. It therefore maintains its Buy rating while lowering its earnings forecasts and target price.

Core views

Hansol Chemical reported 2Q26 revenue of W248bn and operating profit of W50bn. Operating profit was broadly in line with the Bloomberg consensus estimate of W51bn but below Goldman Sachs' estimate of W53bn; Goldman Sachs believes the variance was mainly attributable to persistent weakness in the QD materials business. Despite headwinds from weaker LCD TV demand and a customer's downsizing of its LCD business, Goldman Sachs still believes semiconductor materials growth driven by demand from memory and foundry customers can support steady expansion in the company's operating profit and ultimately more than offset the impact of weakness in display materials. In semiconductor materials, hydrogen peroxide revenue was broadly in line with Goldman Sachs' estimate and delivered solid double-digit YoY growth. Goldman Sachs expects the ramp-up of SK Hynix M15X and Samsung P4 in 2H26 to drive volume growth, while Samsung P5 and SK Hynix Yongin 1 provide opportunities for further incremental growth in 2027; its corresponding hydrogen peroxide revenue growth forecasts for 2026 and 2027 are 19% and 15%, respectively. The company holds a dominant share of South Korea's semiconductor-grade H2O2 market, an important foundation for the report's positive medium- to long-term outlook on semiconductor materials growth. The precursor business's 2Q26 revenue was slightly below Goldman Sachs' estimate, which the report attributes to increased competition. Although precursors maintained strong YoY growth in 1H26, Goldman Sachs expects intensifying competition to persist in 2H26 and slow the pace of growth, leading it to lower its 2026 precursor revenue forecast by 7%. Nevertheless, the company continues to expand its precursor product portfolio, while medium- to long-term demand from core memory and foundry customers remains solid. Goldman Sachs expects precursor revenue to grow 20% YoY in 2027. Battery materials include binders, battery tape, and silicon anodes, and their 2Q26 revenue was broadly in line with expectations. Goldman Sachs expects this business's revenue to grow 7% in 2026; with increasing ESS demand, the addition of new ESS customers, and an EV market recovery, revenue growth is expected to accelerate to 31% in 2027. This implies that after relatively moderate near-term growth, battery materials could become a more meaningful source of incremental growth in the following year. Display materials are the primary current drag. 2Q26 QD materials revenue was meaningfully below Goldman Sachs' estimate, extending the weak trend. The report attributes this to factors including sluggish LCD TV demand and a major customer's adjustment of its TV strategy and downsizing of its LCD business. Based on these factors, Goldman Sachs expects QD materials revenue to decline 30% YoY in 2026, with display materials unlikely to recover in the near term to a level sufficient to offset growth in other businesses. Reflecting these changes, Goldman Sachs revised its 2026E, 2027E, and 2028E revenue forecasts to W975.0bn, W1,091.0bn, and W1,199.0bn, respectively, from W990.4bn, W1,104.0bn, and W1,182.2bn previously; its corresponding EBITDA forecasts are W256.7bn, W315.5bn, and W353.8bn. Revenue is expected to grow 10.3%, 11.9%, and 9.9% from 2026 to 2028, respectively, while EBITDA is expected to grow 22.1%, 22.9%, and 12.1%. The EBIT margin is forecast to rise from 19.3% in 2026 to 22.9% in 2027 and 23.6% in 2028. Goldman Sachs also lowered its 2026E, 2027E, and 2028E EPS forecasts by 4%, 5%, and 1%, respectively, to W14,626, W17,955, and W20,278, from W15,207, W18,856, and W20,413 previously. On valuation, Goldman Sachs uses an EV/EBITDA-based SOTP valuation to reflect differences among the businesses in growth, margins, and competitive dynamics. It values the tech materials business at W282,000 per share using 13.0x EV/EBITDA, compared with W291,000 and 12.8x previously. It values the EV battery materials business at W80,000 per share, maintaining 20.0x EV/EBITDA, and the paper and environmental business at W4,000 per share, maintaining 5.0x EV/EBITDA. Based on its latest earnings forecasts and peer valuation multiples, Goldman Sachs lowered its 12-month target price from W370,000 to W360,000; relative to the current price of W201,000 stated in the report, this implies 79.1% upside. The shares were trading at 11.5x 12-month forward P/E at the time, and Goldman Sachs maintains its Buy rating. The key risks explicitly identified in the report are customer concentration and cost pressure from rising oil and LNG prices. At the business level, investors should also monitor the risks that precursor competition continues to intensify and that weakness in LCD demand and a major customer's business downsizing cause the decline in QD materials to remain substantial.

Analysis framework

Goldman Sachs first compares 2Q26 revenue and operating profit with its own forecasts and Bloomberg consensus estimates, identifying QD materials as the main source of the earnings variance. It then analyzes demand, customer capacity ramp-ups, competition, and end-market changes for hydrogen peroxide, precursors, battery materials, and QD materials, and updates its segment revenue and company earnings forecasts accordingly. Finally, the report performs an SOTP valuation based on the different growth, margin, and competitive characteristics of each business and derives a 12-month target price using segment-specific EV/EBITDA multiples.

Methodology notes

• Event-Driven Trading and Behavioral FinanceExpectation Gap/Expectation Management

  Comparison of actual results with Goldman Sachs' estimates and market consensus

  The report compares 2Q26 operating profit of W50bn with Goldman Sachs' estimate of W53bn and the Bloomberg consensus estimate of W51bn, distinguishing a miss against the institution's own forecast from broad alignment with market expectations, and then traces the variance to the QD materials business.

• Valuation MethodologySOTP Valuation

  Valuing individual business lines separately and aggregating them

  Goldman Sachs separately estimates the per-share values of the tech materials, EV battery materials, and paper and environmental businesses to reflect their differing growth rates, margins, and competitive environments, and uses these values to derive the company's target price.

• Valuation MethodologyEV/EBITDA valuation

  Pricing segments using EV/EBITDA multiples

  The report applies EV/EBITDA multiples of 13.0x, 20.0x, and 5.0x to the tech materials, EV battery materials, and paper and environmental businesses, respectively, and combines them with updated earnings forecasts and the latest peer multiples to determine segment values.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hansol Chemical (014680.KS)

  The report believes the company will benefit from demand from memory and foundry customers, semiconductor capacity ramp-ups, and growth in battery materials, but will face headwinds from weakness in QD materials and intensifying competition in some precursor products.

  Strengths

  Dominant share of South Korea's semiconductor-grade H2O2 market; solid customer demand for semiconductor materials; continued expansion of the precursor product portfolio; and battery materials growth opportunities from new ESS customers and an EV market recovery.

  Weaknesses

  The QD materials business is affected by weak LCD TV demand and a major customer's downsizing of its LCD business, while precursors have recently faced more intense competition.

  Comparison

  The tech materials segment valuation multiple was adjusted to 13.0x EV/EBITDA based on the latest peer multiples.

  Risks

  Customer concentration, cost pressure from rising oil and LNG prices, precursor competition, and persistent weakness in QD materials demand.

Key data

• 2Q26 RevenueW248bnQuarterly revenue reported by the company
• 2Q26 Operating ProfitW50bnClose to the Bloomberg consensus estimate of W51bn and below Goldman Sachs' estimate of W53bn
• Hydrogen Peroxide Revenue Growth Forecast2026E +19%; 2027E +15%Customer capacity ramp-ups are expected to drive volume growth
• Revision to 2026 Precursor Revenue Forecast-7%Lowered due to increased competition
• 2027 Precursor Revenue Growth Forecast+20% YoYBased on product portfolio expansion and demand from memory and foundry customers
• Battery Materials Revenue Growth Forecast2026E +7%; 2027E +31%ESS demand, new customers, and an EV market recovery are expected to drive acceleration in 2027
• 2026 QD Materials Revenue Forecast-30% YoYAffected by sluggish LCD TV demand and a major customer's downsizing of its LCD business
• Revenue Forecast2026E W975.0bn; 2027E W1,091.0bn; 2028E W1,199.0bnPrevious forecasts were W990.4bn, W1,104.0bn, and W1,182.2bn, respectively
• EBITDA Forecast2026E W256.7bn; 2027E W315.5bn; 2028E W353.8bnCorresponding to YoY growth of 22.1%, 22.9%, and 12.1%
• EPS Forecast2026E W14,626; 2027E W17,955; 2028E W20,278Lowered by 4%, 5%, and 1%, respectively; previous forecasts were W15,207, W18,856, and W20,413
• Tech Materials Segment ValueW282,000/shareBased on 13.0x EV/EBITDA; previously W291,000/share and 12.8x
• EV Battery Materials Segment ValueW80,000/shareBased on 20.0x EV/EBITDA, unchanged from previously
• Paper and Environmental Business Segment ValueW4,000/shareBased on 5.0x EV/EBITDA, unchanged from previously
• 12-Month Target PriceW360,000Lowered from W370,000
• Current Price and UpsideW201,000; 79.1%The current price stated in the report and its upside to the target price
• 12-Month Forward P/E11.5xTrading valuation shown in the report's chart

Impact & implications

Goldman Sachs believes the near-term decline in QD materials will reduce some revenue and earnings expectations, but hydrogen peroxide, precursors, and battery materials retain growth drivers including customer capacity expansion, product portfolio expansion, and recovering end demand. Structural growth in semiconductor materials is expected to support overall operating profit expansion. Therefore, although the earnings forecasts and target price were lowered, the report's Buy conclusion remains unchanged.

Risks

• Customer concentration could amplify the impact of changes in a single customer's demand or strategy on the company's results.
• Rising oil and LNG prices could increase cost pressure.
• Intensifying precursor competition could cause growth to continue slowing in 2H26.
• Sluggish LCD TV demand and a major customer's downsizing of its LCD business could keep QD materials revenue under pressure.

What to watch

• Monitor whether the capacity ramp-ups of SK Hynix M15X and Samsung P4 in 2H26 can drive hydrogen peroxide volumes.
• Monitor whether Samsung P5 and SK Hynix Yongin 1 can generate incremental hydrogen peroxide demand in 2027.
• Monitor the intensity of precursor competition, product portfolio expansion, and progress toward the 20% revenue growth forecast for 2027.
• Monitor the contribution of ESS demand, new ESS customer wins, and an EV market recovery to battery materials growth in 2027.
• Monitor the subsequent impact of LCD TV demand and a major customer's downsizing of its LCD business on QD materials revenue.