Issuer Profile

KOREA
Asia

December 2006
Contact

Phone
852.2916.1121

GENERAL
ANALYSTS
Hong Kong

Angela Choi
Gary Lau

852.2916.1166
852.2916.1177

Sydney

Brian Cahill

852.2916.1121

KCC Corporation
KCC Corporation (KCC), formerly Kumgang Korea Chemicals Co. Ltd.,
is Korea's leading manufacturer of industrial paints, building materials, glass and PVC products.

History and Ownership

KCC was incorporated in 1958; the group entered the chemical business by starting Korea Chemical Co. Ltd. in 1974.
In 2000, it ventured into auto glass by floating Korea Auto Glass Co. Ltd. (KAC). In 2002, it entered into a technical
agreement with DuPont for automobile coating. And in 2005, it changed its name to Kumgang Korea Chemical Co.
Ltd. (KCC Corporation).
It has 7 subsidiaries and 3 affiliated companies:

List of subsidiaries (as of September 2006)

Name of Company
KCC Engineering and Construction Co., Ltd.
Korea Autoglass Corporation
Korea Silica Co.
KCC Singapore Pte., Ltd.
KCC Chemical (Kunsan) Co., Ltd.
KCC Chemical (Beijing)
KCC Chemical (Guangzhou) Co., Ltd.

Ownership

Location

Primary Business

36.03%
40.00%
60.00%
100.00%
100.00%
100.00%
66.00%
(34% owned by KCC Singapore Pte., Ltd.)

Korea
Korea
Korea
Singapore
China
China
China

Construction
Glass
Mining
Industrial Paint
Industrial paint
Industrial paint
Industrial paint

List of affiliated companies (as of September 2006)

Name of Company
Kumgang Leisure Co.
Dongshin Polymer Co., Ltd.
Noksu Chemical Co., Ltd.

Ownership

Location

23.50%
27.03%
18.16%

Korea
Korea
Korea

Mr. Sang-Young Chung (Chairman) and his family hold a substantial portion of the company's stake, followed by
the Hyundai Heavy Industry Group and the rest is held publicly.

KCC Shareholding Pattern

Chung Mong-Jin, 17.7%

Chung Sang-Young, 10%

Others, 49.6%

Chung Mong-IK, 8.8%

Chung Mong-Yeol, 5.3%

Treasury Stocks, 8.6%
Source: Bloomberg

BUSINESS ACTIVITIES AND MARKET POSITION

KCC has No. 1 domestic market positions in most of all of its key products: paint, glass, building materials and PVC
products. It has a strong customer base and distribution network, which support its position as a pricing leader.

Paints (46% of total sales in 1H 2006)

KCC is the largest paint manufacturer in Korea with a 27% market share. It supplies high quality automotive coatings,
marine paints, cargo container coatings, other industrial coatings and construction paints.
KCC has close long-term relationships with customers, especially Hyundai Motors and Hyundai Heavy
Industries. It is difficult for other companies to compete with KCC's network. Major competitors include DPI, Kunsul
Chemistry Paint, Samhwa Paint and Chokwang Paint.

Building Materials (23.3% of total sales in 1H 2006)

KCC is the leading domestic company in building material products with a market share of over 50%. It has a
diversified product mix.
Major competitors for gypsum board include Lafarge Korea & Byuck San. Its major competitor for insulation is
Korea Haniso. KCC's diversified product mix has enabled it to maintain its market share at a relatively stable level in
the past 5 years.

PVC Products (16.7% of total sales in 1H 2006)

KCC produces PVC window frames and flooring. Despite its late entry into the PVC market, the company has rapidly
grown to become the third-largest domestic player behind LG Chemical & Hanwha Chemical.

Glass (14.0% of total sales in 1H 2006)

KCC's glass business primarily focuses on architectural flat glass and automobile safety glass with market shares at
43% and 54%, respectively. The flat glass sector is dominated by KCC with 43% MS, Hankuk Glass with 40% MS &
Imports with 17% MS. With its diversified product mix and leadership positions in all its core products, the company
has experienced steady sales growth.

Moodys Issuer Profile

KCC Market Position Overview

Business

Market Share

Paint
Building materials
Float Glass
PVC Products

27%
More than 50%
40%
18%

Rank
1
1
1
3

Key Competitor(s)
DPI, Kunsul Paint, Samhwa Paint
Byuck San, Lafarge
Hankuk Glass
LG Chemical, Hanwha Chemical

KCC Financial Highlights (KRW Billion)

1,900

1,869.8

1,862.8

1,850
18.4%
1,800
1,750

1,715.0

17.0%

1,700
16.1%
1,650
1,600
2003

2004
Sales

19.0%
18.5%
18.0%
17.5%
17.0%
16.5%
16.0%
15.5%
15.0%
14.5%

2005
EBITDA Margin

Source: Bloomberg

KCC's sales breakdown by key products for 1H 2006:

Revenue by Products 1H 2006

(Total Revenue KRW 937.2 billion)
PVC windows & floorings,
16.7%

Paints - auto & other industrial ,

28.8%

Building material - insulations ,

11.2%

Building material - gymsum board ,

12.1%
Float glasses,
14.0%

Paints - heavy duty, construction,

17.2%

Souce: KCC

Moodys Issuer Profile

To order reprints of this report (100 copies minimum), please call 1.212.553.1658.
Report Number: 98963
Authors

Editor

Senior Production Associate

Angela Choi
Maria Lee

Barry Hing

Wing Chan

Copyright 2006, Moodys Investors Service, Inc. and/or its licensors and affiliates including Moodys Assurance Company, Inc. (together, MOODYS). All rights reserved. ALL
INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED,
FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN
ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODYS PRIOR WRITTEN CONSENT. All information contained herein is obtained by
MOODYS from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided as
is without warranty of any kind and MOODYS, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness
for any particular purpose of any such information. Under no circumstances shall MOODYS have any liability to any person or entity for (a) any loss or damage in whole or in part caused by,
resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODYS or any of its directors, officers, employees or
agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect,
special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODYS is advised in advance of the possibility of such
damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information
contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY,
EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER
OPINION OR INFORMATION IS GIVEN OR MADE BY MOODYS IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any
investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of
each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling.
MOODYS hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by
MOODYS have, prior to assignment of any rating, agreed to pay to MOODYS for appraisal and rating services rendered by it fees ranging from $1,500 to $2,400,000. Moodys Corporation
(MCO) and its wholly-owned credit rating agency subsidiary, Moodys Investors Service (MIS), also maintain policies and procedures to address the independence of MISs ratings and rating
processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly
reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moodys website at www.moodys.com under the heading Shareholder Relations Corporate
Governance Director and Shareholder Affiliation Policy.
This credit rating opinion has been prepared without taking into account any of your objectives, financial situation or needs. You should, before acting on the opinion, consider the
appropriateness of the opinion having regard to your own objectives, financial situation and needs.

Moodys Analysis