ENF Technology

All figures are K-IFRS consolidated, in KRW billions, for fiscal years ending 31 December. FY2022 is on the restated basis.

Income statement

Pre-tax income was KRW 29.2 billion in FY2021, a loss of KRW 19.9 billion in FY2023, KRW 53.1 billion in FY2024 and KRW 70.2 billion in FY2025. ENF has no material dilutive instruments, so diluted EPS is in line with basic EPS. The FY2025 dividend of KRW 200 was paid in 2026. Revenue grew at a compound annual rate of 6.5% from FY2021 to FY2025, and 13.1% from the FY2023 trough to FY2025.

Quarterly trajectory

For the twelve months to 30 June 2026, revenue was KRW 698.8 billion, operating profit KRW 85.3 billion (12.2% margin) and net income KRW 57.2 billion (EPS KRW 4,006).

Commentary. The five years show two cycles. In FY2021 operating margins were squeezed to 5.0% by display weakness, a stronger won and rising raw-material costs. FY2022 then saw a sharp volume recovery. FY2023 was the trough: memory makers cut wafer starts and display inventories were corrected. Revenue fell 17.5%. Large impairments and non-operating losses produced a pre-tax loss even though operating profit stayed positive at KRW 23.9 billion. Since then, margins have improved structurally. Gross margin rose from 16.8% in FY2023 to 23.6% in FY2025 and 24.3% on a trailing basis. Management attributes this to stable raw-material prices, higher plant utilisation and a richer semiconductor mix. The Q4 2025 operating margin fell to 6.3%. This reflected the usual year-end bonus accruals and one-off start-up costs for new facilities, not a demand break. Margins recovered to 14.6% in Q1 2026 and a record 15.3% in Q2 2026. EBITDA has grown faster than EBIT because depreciation rose from KRW 29.4 billion to KRW 52.5 billion after the 2021–2024 capex cycle (Kyle, Cheonan, HF capacity).

Balance sheet

At 30 June 2026, total assets were KRW 794.9 billion, cash and short-term investments KRW 115.9 billion, total debt KRW 214.0 billion, net debt KRW 97.1 billion and total equity KRW 494.4 billion. Equity rose partly because FEM Technology was consolidated, which lifted minority interest to KRW 11.9 billion. Book value per share was KRW 33,771. Goodwill of KRW 5.0 billion was fully written down after FY2021.

Commentary. Leverage peaked in FY2023. Net debt reached KRW 180.9 billion as ENF borrowed short-term to fund KRW 106.3 billion of capex in a loss-making year. Working capital turned negative in FY2024 because short-term borrowings had risen to KRW 169.5 billion. That year some debt was refinanced into long-term facilities, and in FY2025 net debt fell 38% to KRW 101.7 billion. The liability-to-equity ratio fell to about 66% at end-2025. Liquidity is now adequate, with a current ratio of 1.32 on the latest figures, although the debt structure still leans toward short-term bank lines.

Cash flow

ENF made no share buybacks in the period. Trailing operating cash flow to June 2026 was KRW 99.3 billion, capex KRW 50.5 billion and free cash flow KRW 48.8 billion.

Commentary. Cash conversion has improved markedly. From FY2021 to FY2023 heavy investment in Kyle, Cheonan and HF capacity absorbed operating cash flow and needed borrowing. Free cash flow was negative in two of those three years. In FY2024 and FY2025 operating cash flow roughly doubled to more than KRW 100 billion a year, and capex fell back to about KRW 58 billion. Cumulative free cash flow of about KRW 70 billion over FY2024–FY2025 was used to cut debt rather than raise payouts. Dividends were about KRW 2.1 billion a year, a payout ratio of 4–7%. This is the main point of tension with minority shareholders.

Ratios

ROA uses net income over average total assets. ENF does not report interest coverage or the cash conversion cycle. Inventory turnover recovered from 5.3x in FY2023 to 7.5x in FY2025, which points to a shorter inventory cycle as utilisation rose. On a trailing basis to mid-2026, ROE was about 12.3% and net debt to EBITDA about 0.7x.

Management guidance. ENF does not publish numeric guidance. Its qualitative outlook for 2026–2027 rests on continued growth in AI-related memory output, supply to new DRAM fabs, mass production of high-purity HF, entry into phosphoric-acid etchants and better US utilisation as Taylor ramps.

Consensus expectations (KRW bn):

Revenue (KRW bn): FY2024: 582.4; FY2025: 670.9; FY2026: 737.4; FY2027: 811.6

Operating profit (KRW bn): FY2024: 59.3; FY2025: 78.1; FY2026: 81.6; FY2027: 118.1

Net income attributable (KRW bn): FY2024: 31.1; FY2025: 51.9; FY2026: 60.3; FY2027: 89.2

EPS (KRW): FY2024: 2178; FY2025: 3635; FY2026: 4223; FY2027: 6245

FY2024 and FY2025 are actual results; FY2026 and FY2027 are broker estimates. In 1H2026, ENF earned operating profit of KRW 52.2 billion on revenue of KRW 349.9 billion. That means the FY2026 estimate implies a softer second half than the first unless estimates rise.

Bull case.

1. HF localisation becomes a share gain at both Korean memory makers. A double-digit share at SK hynix within weeks of qualification suggests room for further gains as volumes rise in 2H2026.

2. Taylor ramps in 2027, making Kyle profitable and adding about KRW 30–40 billion of revenue a year on an asset base that is already built.

3. Margins converge toward peers. Gross margin has already moved from 16.8% to 24.3%. A richer mix of HF, phosphoric acid and Taylor products could lift the operating margin toward 14–15% by FY2027, and the shares trade at roughly half the peer P/E.

Bear case.

1. Raw-material inflation linked to oil compresses margins on thinners, which are a large part of revenue.

2. New products slip. If high-purity HF and phosphoric-acid etchants are delayed, the FY2027 inflection moves back and the stock stays a low-multiple cyclical.

3. Governance caps the re-rating. A 35.5% controlling holder, combined chair and CEO roles and a payout ratio below 7% may keep a discount to peers regardless of earnings.

Key catalysts and monitorables (next 12 months):

Mid-November 2026: Catalyst / monitorable: Q3 2026 results: SK hynix HF contribution, effect of raw-material costs on margins

2H2026: Catalyst / monitorable: SK hynix HF volume ramp and any extension to more lines

Late 2026 to 2027: Catalyst / monitorable: Commercial launch of the high-selectivity phosphoric-acid etchant and the new high-purity HF

March 2027: Catalyst / monitorable: FY2026 results and AGM: dividend decision and response to minority-shareholder pressure

2027: Catalyst / monitorable: Samsung Taylor mass production and Kyle utilisation and profitability

Ongoing: Catalyst / monitorable: Memory wafer starts, new DRAM fab ramps, oil and propylene prices, any M&A after the October 2026 recruitment for M&A roles

Analyst verdict. ENF Technology has changed considerably over the past three years. The FY2023 loss year, when revenue fell 17.5% and net income was a KRW 17.5 billion loss, was followed by record revenue of KRW 670.9 billion in FY2025 and a record quarterly operating profit of KRW 27.3 billion in Q2 2026. The improvement looks structural more than cyclical. Gross margin has risen by about seven percentage points. Net debt has fallen by almost half from its peak. FEM Technology's consolidation gives ENF control of an HF chain that most Korean competitors lack. The first HF shipments to SK hynix in June 2026, which quickly reached a double-digit share, show the localisation strategy delivering in Korea's most demanding DRAM fabs.

The market still values ENF as a cyclical solvent maker, at about 10.6x trailing earnings and 1.2x book, roughly half the peer median. This discount is partly justified. Operating margins are still four to six points below Soulbrain, Dongjin Semichem and Hansol Chemical. Two-thirds of debt is short-term. Kyle remains a cost centre until Taylor ramps in 2027. The controlling group's low payout policy has now drawn a public challenge from a respected domestic value investor.

If ENF moves even halfway toward peer margins as the HF, phosphoric-acid and Taylor projects mature, FY2027 earnings could rise about 50% from FY2025. At the current multiple that would imply meaningful upside before any re-rating. The main swing factors are new-product timing and raw-material costs, and both should become clearer over the next three to four quarters. A clear move toward higher shareholder returns would remove the most visible reason for the discount. Without one, the shares are likely to stay a low-multiple stock that tracks the memory cycle.