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- Rift Deepens Among Financial Chiefs Over Lee Bok-hyun’s Stance
- On April 2, Financial Supervisory Service (FSS) Governor Lee Bok-hyun appeared on CBS Radio's 'Kim Hyun-jung's News Show' and announced his intention to resign following Acting President and Prime Minister Han Deok-soo's exercise of the right to request reconsideration (veto) of the Commercial Act amendment. This public statement came just a day after the veto was exercised, during which Lee reiterated his opposition to the decision.
Lee expressed that he firmly believes President Yoon Suk-yeol would not have exercised the veto if he were in office, emphasizing that until late last year, the Ministry of Justice shared this perspective. He lamented that since the end of last year, important policy issues have become overly politicized, leading to societal confusion.
He further stated, "It's regrettable that matters which should have been discussed within the government have surfaced publicly. I also feel apologetic towards the Financial Services Commission Chairman and the Deputy Prime Minister. There's a misunderstanding that we are voicing different opinions externally."
However, it was Lee himself who publicly opposed the government's stance by declaring he would stake his position against the veto of the Commercial Act amendment. He even revealed during the broadcast that he had submitted his resignation to the Financial Services Commission Chairman, following through on his earlier commitment.
The amendment in question seeks to change the duty of company directors from being loyal to the company's interests to being loyal to both the company and its shareholders, a topic that has garnered diverse opinions. While the FSS Governor is entitled to his viewpoint, as a public official, it's imperative to consider the responsibilities and obligations that come with the position.
The FSS was established to oversee and inspect financial institutions, ensuring a sound financial market environment and protecting financial consumers. Therefore, the Governor's role is not to set policy directions but to focus on supervision and inspection. Engaging in actions resembling those of a politician can lead to criticism and potential market instability.
Notably, the FSS Governor's public statements can significantly impact the financial market. Recent appearances on various media platforms, including MBC Radio and the YouTube channel 'Sampro TV,' have raised concerns about the appropriateness of such actions.
Lee's recent resignation offer is seen not as an act of taking responsibility but rather as an abdication of duty. In turbulent times, the role of regulatory leaders becomes even more crucial. Lee himself mentioned that both the Deputy Prime Minister and the Bank of Korea Governor advised against hasty actions given the current market difficulties. He acknowledged the importance of attending the upcoming 'F4' meeting of economic and financial leaders scheduled for April 3.
The weight of the words "staking one's position" should not be taken lightly. With the domestic and international financial markets facing numerous challenges, including mutual tariffs imposed by the U.S., the Homeplus incident, and household debt management amid declining interest rates, the FSS Governor's role is pivotal. It's essential for Lee to focus on his duties, considering the significant impact his position has on the national economy and financial markets.
Lee's term is set to end in June 2025. As the end of his term approaches, it's crucial for him to prioritize the responsibilities of his position over personal influence, ensuring that the weight of the FSS Governor's role is upheld.
#LeeBokHyun #FinancialSupervisoryService #Resignation #CommercialAct #GovernmentPolicy #FinancialMarkets #PublicOfficeResponsibilities
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- UMC-GF Merger Cornering Samsung Foundry — Yield Pressure Mounts for Han Jin-man
- With TSMC widening the gap at the top, and Chinese players rapidly advancing, Samsung’s foundry unit risks falling further behind in the global semiconductor race.
Samsung Electronics’ foundry business (semiconductor contract manufacturing) is facing increased pressure amid reports that Taiwan’s United Microelectronics Corporation (UMC) and U.S.-based GlobalFoundries (GF) are considering a merger. If the deal materializes, it could dethrone Samsung from its current position as the world’s second-largest foundry, further deepening concerns about its competitive edge in the global semiconductor market.
According to reports from Nikkei and Bloomberg on April 2, the potential merger between UMC, currently ranked 4th globally, and GF, ranked 5th, would create a foundry giant surpassing Samsung in total market share. Data from Taiwanese market research firm TrendForce shows that as of Q4 2024, UMC held a 4.7% market share and GF 4.6%, for a combined 9.3%—exceeding Samsung’s 8.1%.
TSMC maintains a commanding lead with 67.1% market share, followed by China’s SMIC at 5.5%.
Although the merger would mostly affect legacy (mature-node) foundry markets—both UMC and GF specialize in nodes above 12nm—it still poses a long-term threat to Samsung. The Korean tech giant has recently increased efforts to expand its presence in legacy segments such as power semiconductors. Starting this year, Samsung will offer GaN (gallium nitride) power semiconductor foundry services on 8-inch wafers for consumer and automotive applications.
Meanwhile, Chinese foundries are accelerating rapidly. SMIC, the world’s third-largest foundry, has reportedly begun mass production using 5nm process technology—achieved without cutting-edge EUV (extreme ultraviolet) lithography tools, instead relying on older DUV (deep ultraviolet) equipment. The company is believed to be manufacturing Huawei’s Ascend 910C series AI chips using this process.
Considering Samsung began 5nm production in 2020, the technology gap with SMIC appears to have narrowed to just around five years. China is also investing heavily in its own EUV systems and advanced technologies such as Gate-All-Around (GAA) transistors to catch up with industry leaders.
U.S. tech media outlet Wccftech reported that China's development path hinges on the success of its domestic EUV lithography systems, expected to begin trial production by Q3 2025. Chinese equipment maker SiCarrier—reportedly linked to Huawei—is said to be working on alternatives to ASML’s EUV tools from the Netherlands.
While competitors advance, Samsung continues to struggle in closing the technology and market share gap with TSMC. Though the yield of Samsung’s 4nm and 5nm processes has improved, its 3nm yields remain below expectations, making it difficult to attract large-scale customers.
Samsung is also falling behind in the 2nm race. TSMC has already secured key clients such as Apple and Qualcomm and is scheduled to begin 2nm mass production in the second half of 2025, with yields estimated to exceed 60%. In contrast, Samsung is not expected to start stable 2nm production until the first half of 2026.
At the annual shareholder meeting on March 19, Samsung’s Head of Foundry Business, President Han Jin-man, acknowledged the challenge, saying, “We may not be able to resolve the issues within Q1 or Q2, but we will do our best. Our biggest goal this year is to quickly improve yield and reach a level of profitability.”
If Samsung fails to narrow the gap with TSMC soon, it could find itself overtaken by fast-rising challengers.
To make matters worse, Samsung’s foundry business is expected to post another operating loss of KRW 4–5 trillion (approx. $3–3.8 billion USD) this year, following a similar performance in 2024.
U.S. IT news outlet PhoneArena noted, “Samsung’s 2nm yield is reportedly around 30%, well below TSMC’s 60–70%. Samsung has failed to secure major clients for its 3nm process and is facing similar struggles at 2nm. To sustain its foundry business, it must attract more customers.”
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- Park Hyun-chul of Lotte E&C Clears Key Hurdle in Financial Stability, Races to Contain Bridge Loan Risks
- Lotte Engineering & Construction (E&C) has improved its financial structure by lowering its debt ratio below the 200% level, which is often considered a danger threshold, despite a slump in the construction industry.
Park Hyun-chul, Vice Chairman and CEO of Lotte E&C, is expected to maintain a cautious stance and accelerate financial restructuring efforts, given the high proportion of bridge loans among the company's contingent liabilities that remain in the pre-construction phase.
According to Lotte E&C’s business report released on April 2, its consolidated debt ratio at the end of last year stood at 196%, down about 40 percentage points from 235.3% at the end of 2023.
This suggests that Lotte E&C is gradually recovering from the liquidity crisis triggered by the Legoland incident in 2022. Compared to the 264% debt ratio at the end of 2022, the figure has fallen by nearly 70 percentage points.
As of the end of last year, total borrowings were KRW 2.0454 trillion (US$ 1.47 billion), a decrease of KRW 763.5 billion (US$ 550.5 million) from the end of 2023. The debt-to-asset ratio, which indicates the proportion of debt to total assets, dropped 8 percentage points to 24%.
Current portions of long-term liabilities—debts due within one year—stood at KRW 1.3685 trillion (US$ 985.9 million) at the end of last year, less than half of the KRW 2.8933 trillion (US$ 2.08 billion) recorded at the end of 2022.
Vice Chairman Park is effectively fulfilling the role he was brought in for as a “firefighter.”
He previously served as Head of the Business Restructuring Office at Lotte Holdings and was appointed CEO of Lotte E&C in December 2022, amid the company's liquidity crisis.
Upon Park’s appointment, Lotte Group stated, “We expect him to actively resolve market instability and address Lotte E&C’s pending issues based on his excellent risk management and business restructuring capabilities.”
Despite a harsh round of leadership reshuffles among Korea’s top 10 construction companies due to an industry downturn last year, Park retained his position, demonstrating recognition of his leadership.
However, Park is expected to remain vigilant.
While the company’s financial structure is improving with a lower debt ratio and reduced borrowings, challenges remain with its real estate project finance (PF) contingent liabilities.
Typically, real estate PF funding consists of three stages: bridge loans, main PF, and group loans. Bridge loans are used for land acquisition and permitting before construction begins, then converted to main PF once the project kicks off. After completion, buyers pay via installment and mortgage loans.
Bridge loans, being pre-construction, are considered riskier due to low project visibility. The older the project, the greater the perceived risk, as this often indicates difficulty in securing further investment.
With the real estate market deteriorating, construction companies have been focusing on reducing PF-related contingent liabilities. As of the end of last year, some of Korea’s top 10 builders had eliminated bridge loan-related contingent liabilities altogether.
However, at the end of last year, about 95% of Lotte E&C’s PF-related contingent liabilities were tied to bridge loans. Of the company’s KRW 4.1608 trillion (US$ 2.99 billion) in PF contingent liabilities, only KRW 228.4 billion (US$ 164.7 million) was associated with main PF projects that had progressed into full-scale development.
NICE Investors Service pointed out in a report at the end of last year, “Lotte E&C’s PF-related contingent liabilities remain excessively high compared to its equity capital.”
The agency added, “As of the end of November 2023, PF contingent liabilities from unstarted or poorly selling high-risk construction projects totaled KRW 2.4 trillion (US$ 1.73 billion), leaving considerable exposure to realization risk under the current weak housing market.”
Park is expected to continue focusing on converting bridge loans into main PF and reducing contingent liabilities to further improve financial stability.
Lotte Group as a whole is also working on plans to reduce these liabilities.
At the March shareholders’ meeting, Lotte Holdings CEO Lee Dong-woo stated, “Lotte E&C will pursue PF projects within the limits of its equity capital. PF-related contingent liabilities, which once stood at KRW 6.8 trillion (US$ 4.91 billion), have improved to KRW 3.7 trillion (US$ 2.67 billion), and we aim to reduce this to below KRW 2.8 trillion (US$ 2.02 billion) by year-end.”
Lotte E&C is also reviewing the sale of its headquarters building in Seocho, Seoul, and is working to improve its financial soundness by optimizing non-core assets. If asset optimization proceeds as planned, the debt ratio is expected to drop to 150% by 2026.
A Lotte E&C spokesperson said, “We are currently conducting internal reviews and consulting with external experts on optimizing our asset portfolio,” adding, “We will continue focusing on financial stability and cash flow management initiated in 2022, and will also manage already awarded or invested projects efficiently.”
#LotteEandC #ParkHyunchul #financialrestructuring #debtmanagement #PFrisk #bridgeloans #Koreanconstruction #realestatePF #LotteGroup #businessturnaround
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- From 7th in the Business Rankings to Just Kumho E&C and Kumho Express Left – Park Se-chang’s Arduous Road
- Park Se-chang, Vice Chairman of Kumho E&C, is often referred to in the business world as the "tragic crown prince."
This is because he had to witness the near-collapse of the Kumho Asiana Group, which had once risen to become the seventh-largest business group in Korea, due to reckless mergers and acquisitions and the direct impact of the global financial crisis.
With the sale of its core affiliate, Asiana Airlines, the group’s stature diminished significantly, and Park now carries the heavy responsibility of rebuilding the group around Kumho E&C.
After the sale of Asiana Airlines, Kumho Asiana Group is no longer classified as a large conglomerate and has dropped out of the top 100 business rankings, now standing as a mid-sized group.
◆ Third-Generation Leadership in Hardship
Park Se-chang’s path to rebuilding the group is far from smooth.
The remaining affiliates under the Kumho Asiana umbrella are limited to Kumho E&C, Kumho Express, the Kumho Asiana Cultural Foundation, and the Jukho Academy Foundation. Among them, the flagship affiliate, Kumho E&C, has continued to show declining performance.
Kumho E&C’s operating profit dropped from KRW 111.6 billion (US$ 80.5 million) in 2021 to KRW 55.9 billion (US$ 40.3 million) in 2022, and further declined to KRW 21.8 billion (US$ 15.7 million) in 2023.
Revenue also showed a downward trend, falling from KRW 2.0485 trillion (US$ 1.476 billion) in 2022 to KRW 2.2176 trillion (US$ 1.599 billion) in 2023, and KRW 1.9141 trillion (US$ 1.38 billion) in 2024, failing to achieve top-line growth.
The financial condition is also unstable.
With rising debt and shrinking capital, the debt ratio has surged sharply.
According to NICE Investors Service, Kumho E&C’s debt ratio rose from 165.9% in 2021 to 211.3% in 2022, 260.2% in 2023, and nearly 588.8% last year.
This debt ratio is even higher than that of Shindong-A Construction, which entered court receivership in January 2024 with a debt ratio of 428.8%.
In addition, a decrease in cash and cash equivalents has raised concerns about a potential liquidity crisis, negatively impacting the company’s credit rating.
In May 2024, Korea Investors Service changed Kumho E&C’s corporate credit rating (ICR) outlook from “Stable” to “Negative.”
Park Chan-bo, Senior Researcher at Korea Investors Service, stated, "Kumho E&C's declining profitability is worsening its cash flow, thereby increasing its financial burden," and added, "The limited potential for short-term profitability improvement was also a factor in the negative outlook."
Vice Chairman Park is seeking a turning point with approximately KRW 30 billion (US$ 21.6 million) in cash assets expected from a recent legal victory related to the Asiana Airlines down payment dispute, and by promoting Kumho E&C’s residential brand ‘Artera.’
Following a string of successful housing projects under the Artera brand, Kumho E&C announced a plan to launch 4,342 housing units in 2025, an increase of about 17.5% compared to 2024.
Kim Se-ryeon, a researcher at LS Securities, commented, "Kumho E&C is expected to strengthen its order capabilities through increased project wins in LH’s Phase 3 New Town developments and the reinforcement of the Artera brand. In addition, the improved financial structure of the parent company, Kumho Express, is also a positive factor."
Vice Chairman Park has set a target of KRW 2.7 trillion (US$ 1.95 billion) in orders for 2025 and is determined to continue the company’s growth trajectory by leveraging Artera’s brand recognition.
◆ Focus on Performance Improvement at Kumho E&C While Facing Safety Challenges
Although Park Se-chang is striving to improve Kumho E&C’s performance, safety issues remain a major challenge.
Two fatal accidents occurred at Kumho E&C construction sites within a month, raising concerns over poor safety management.
Previously, Kumho E&C had already come under fire for the Osong disaster, in which the company was accused of damaging a levee for construction convenience, contributing to the tragedy. With repeated fatal accidents, the pressure on the company has grown.
The recent accident sites are all subject to the Serious Accidents Punishment Act, which holds business owners and executives accountable for workplace fatalities if they fail to ensure safety and health standards.
The law stipulates strict criminal penalties if a serious industrial accident occurs due to failure by business owners or executives to fulfill their safety obligations.
Although Park Se-chang is a non-registered executive at Kumho E&C and is therefore not directly subject to prosecution under the law, he is likely to face mounting concerns as the owner-operator of the company.
#ParkSechang #KumhoE&C #KumhoGroup #AsianaAirlines #corporaterecovery #Koreanconstruction #Artera #businessleadership #debtcrisis #seriousaccidentslaw
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- BNK’s Path to a Full-Service Financial Group Still Distant – Bin Dae-in’s ‘Too Slow’ Leadership
- Bin Dae-in, Chairman of BNK Financial Group, is pushing to transform the company from a regional bank into a comprehensive financial group.
Industry insiders say that to achieve this goal, BNK needs to strengthen its non-banking portfolio and pursue conversion into a nationwide commercial bank.
Despite having been in office for over two years, Chairman Bin finds himself facing realistic obstacles surrounding BNK Financial Group, making progress slow.
Can he demonstrate the leadership needed to resolve BNK’s mounting challenges and set a new course for growth?
◆ Repeatedly Failed Insurance Acquisitions, Hindered by Former Chairman
Since his inauguration in March 2023, Chairman Bin Dae-in has attempted to strengthen BNK’s non-banking portfolio by acquiring life and non-life insurance companies.
BNK Financial Group currently has nine subsidiaries, including BNK Busan Bank, BNK Kyongnam Bank, BNK Capital, BNK Securities, BNK Savings Bank, BNK Asset Management, BNK Venture Investment, BNK Credit Information, and BNK Systems. However, it does not have an insurance affiliate.
In 2023, Chairman Bin partnered with a private equity firm to pursue the acquisition of ABL Life Insurance but failed to reach the final stages. In 2024, he once again collaborated with a private equity firm to secure BNP Paribas Cardif Life Insurance by positioning BNK as a strategic investor (SI), but the effort was abandoned.
Despite Bin’s strong will to acquire an insurance company, the attempts failed mainly due to legal issues stemming from the tenure of former Chairman Sung Se-Hwan.
In 2016, Sung was involved in a case where BNK Investment & Securities employees were mobilized to induce 14 Busan Bank clients to purchase BNK Financial Group stocks. The representatives of these client companies invested about KRW 17.3 billion (US$ 12.5 million) to acquire around 4.65 million shares of BNK Financial Group.
Due to Sung’s stock price manipulation case, BNK Financial Group was also fined in October 2021 for violating the Capital Markets Act.
As a result of the fine, BNK became ineligible as a qualified major shareholder. According to the Financial Services Commission’s regulations, any entity that has received criminal punishment of a fine or more for violating financial laws within the past five years is disqualified as a major shareholder.
Consequently, BNK Financial Group is effectively barred from acquiring subsidiaries or entering new businesses directly until October 2026.
Insurance affiliates are known to be major contributors to financial groups’ profitability, which is why Chairman Bin continues his push for acquisitions even through partnerships with private equity firms.
For example, KB Insurance has become the most profitable non-banking subsidiary under KB Financial Group, playing a vital role in KB maintaining its position as the leading financial group.
In 2024, KB Insurance posted a net profit of KRW 839.5 billion (US$ 605 million), a 17.7% increase year-on-year. This accounted for about 17% of KB Financial Group’s total net profit of KRW 5.0782 trillion (US$ 3.66 billion).
Shinhan Life Insurance also recorded KRW 528.4 billion (US$ 381 million) in net profit in 2024, its best performance since the 2021 merger of Shinhan Life and Orange Life.
◆ Bin Dae-in Cautious on Commercial Bank Transition Amid Internal Opposition and Shareholding Issues
To shed its label as a “regional financial group” and become a comprehensive financial group, BNK Financial Group is also considering converting BNK Busan Bank and BNK Kyongnam Bank into nationwide commercial banks.
However, Chairman Bin is taking a cautious stance on this matter.
In an interview with another media outlet on November 19, 2024, he said, “Expanding our business territory without firmly establishing ourselves in our home region has its limits,” adding, “Once we become more competitive locally and able to operate effectively outside the Busan-Ulsan-Gyeongnam region, we will consider transitioning into a commercial bank.”
Since acquiring Kyongnam Bank in 2014, BNK Financial Group has maintained a policy of allowing independent management. For the commercial bank transition to happen, both emotional and operational integration between Busan Bank and Kyongnam Bank is seen as necessary.
To advance emotional integration, Bin recently appointed Shin Tae-Soo, a Kyongnam Bank alumnus, as CEO of BNK Credit Information. The integration of the two banks’ IT systems is also progressing.
According to a report by KNN, Busan Bank decided to implement a new next-generation IT system (NGBS) by 2028. This system will also be applied to Kyongnam Bank in 2030.
However, this integration has raised concerns among Kyongnam Bank’s labor union, which has long viewed IT system integration as a precursor to a full merger.
In a statement issued on January 17, 2023, the Kyongnam Bank labor union warned BNK Financial Group’s chairman candidates, “If you have any intention of disrupting the two-bank system, abandon it immediately,” adding, “Don’t mistakenly believe that saving a few bucks through IT integration is a sustainable growth strategy.”
Chairman Bin, however, has drawn a clear line, stating that IT integration does not equate to a merger.
At a press briefing held in the Kyongnam region on April 18, 2023, he stated, “Looking at what has happened over the past 10 years, inefficiencies outweigh efficiencies,” and added, “Once IT integration leads to more efficient operations, shareholders won’t be asking, ‘Why haven’t you merged yet?’”
BNK Financial Group must also resolve its ownership structure if it wants to convert into a commercial bank. Under the current separation of banking and commerce law, industrial capital cannot hold more than 4% of a commercial bank’s shares.
Thus, for BNK to make the transition, both Lotte and Hyupsung Construction must divest their holdings.
According to BNK Financial Group’s annual report, Lotte affiliates such as Lotte Shopping and Busan Lotte Hotel collectively own 10.47% of BNK shares. In addition, Hyupsung Construction, a mid-sized construction firm in Busan, and its related parties hold 6.54%.
#BinDaeIn #BNKFinancialGroup #insuranceacquisition #nonbankingportfolio #commercialbankconversion #BusanBank #KyongnamBank #financialregulations #LotteGroup #Koreanfinance
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- Daewoo E&C Warms Up for Urban Redevelopment Bids, Kim Bo-hyun Eyes Han River Projects in Second Half
- Kim Bo-hyun, President and CEO of Daewoo Engineering & Construction (E&C), has been taking a cautious approach in the urban redevelopment market this year while emphasizing sound management practices.
Kim is expected to target major project sites along the Han River, such as Yongsan, Seongsu, and Yeouido, beginning in the second half of the year as opportunities arise to secure contracts.
According to construction industry sources on April 1, Daewoo E&C had yet to secure its first urban redevelopment project contract of the year through the first quarter, along with Hyundai Engineering and SK Ecoplant, among major domestic construction companies.
This is notable because Daewoo E&C owns the well-known apartment brand "Prugio" and, unlike Hyundai Engineering and SK Ecoplant, has a relatively higher proportion of its business dedicated to residential construction.
Last year, the company secured KRW 2.98 trillion (US$ 2.15 billion) in domestic urban redevelopment contracts, ranking fifth in total annual orders. Its 2023 performance was only about KRW 1 trillion (US$ 721 million) behind Samsung C&T (KRW 3.64 trillion or US$ 2.62 billion) in third place and GS E&C (KRW 3.11 trillion or US$ 2.24 billion) in fourth.
This year, the domestic urban redevelopment market has significantly expanded and become more active.
By the end of the first quarter, the total amount of urban redevelopment contracts awarded to the top 10 construction companies reached KRW 11.37 trillion (US$ 8.2 billion). Compared to KRW 4 trillion (US$ 2.88 billion) during the same period last year, the market has nearly tripled. Some companies, like Samsung C&T and Lotte E&C, have already achieved annual-level performance in just one quarter.
For Daewoo E&C, the absence of urban redevelopment contracts through the first quarter may be somewhat disappointing.
However, since Kim has emphasized "sound management" as a key policy this year, it is likely he will continue a selective approach in the urban redevelopment market, prioritizing profitability.
In his New Year's address, Kim said, “2025 will be the most challenging year of the next three years,” adding, “Let’s focus on internal stability with safety as our top priority.”
During the regular shareholders’ meeting in March, Kim once again emphasized sound management as a core initiative, stating, “We will strengthen financial stability by efficiently managing accounts receivable, increasing contract values, and focusing on core markets and key construction sectors.”
Based on this strategy, Daewoo E&C is expected to selectively bid on urban redevelopment projects, focusing on high-quality locations such as Seoul and the metropolitan area while avoiding excessive competition and targeting only profitable work.
As Daewoo E&C is working to improve its financial structure, it is increasingly important to avoid projects where rising construction costs could erode profits. In cases where it competes with other builders for urban redevelopment contracts, the company could also incur tens of billions of won in operating costs.
Key projects Daewoo E&C is monitoring include the Gangnam Wonhyoseong Villa reconstruction in Banpo Seorae Village, the Cheongpa District 1 redevelopment in Yongsan, the Gunpo District 1 redevelopment in Gunpo City, and the Yeouido Sibeom Apartment reconstruction.
A Daewoo E&C official said, “We are highly likely to be selected as the preferred bidder for the Gunpo District 1 redevelopment,” adding, “We are also actively working on bids for projects such as Gangnam Wonhyoseong Villa, Cheongpa District 1, and Yeouido Sibeom Apartment.”
However, Kim is expected to aim for opportunities in large-scale urban redevelopment projects worth trillions of won scheduled to emerge in the second half of the year to meet this year’s target of KRW 3 trillion (US$ 2.16 billion) in urban redevelopment orders.
Last year, Daewoo E&C also began winning urban redevelopment contracts starting in July, ultimately securing seven projects and showing strong performance in the second half.
This year, as major redevelopment tenders in areas like Apgujeong, Seongsu, and Yeouido along the Han River begin in earnest in the second half, fierce competition among leading construction companies is expected.
A Daewoo E&C representative stated, “We will pursue selective bidding focused on high-quality sites as the basic direction for urban redevelopment projects,” adding, “We are closely monitoring redevelopment opportunities in key strategic areas such as Apgujeong, Seongsu, and Yeouido.”
#DaewooEandC #KimBohyun #urbanredevelopment #Prugio #constructionindustry #HanRiverprojects #soundmanagement #Koreanrealestate #housingmarket #redevelopmentprojects
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- Will Hanwha Financial Speed Up Separation? Hurdles Await Hanwha Life’s Kim Dong-won on Path to Independence
- Kim Dong-won, President and Chief Global Officer (CGO) of Hanwha Life Insurance, is drawing attention over whether he will begin the process of formally separating Hanwha Financial from the Hanwha Group.
This speculation arises as discussions about Hanwha Group’s potential transition to a holding company structure have resurfaced. If Hanwha Group transitions to a holding company system, financial subsidiaries overseen by Kim will inevitably have to become independent, in accordance with the principle of separation between industrial and financial capital.
However, analysts say that a complete separation of financial affiliates may take time, as Kim still faces tasks such as securing a larger stake in Hanwha Life.
According to a summary of opinions from inside and outside the financial industry on April 1, there is speculation that Kim may accelerate the separation of Hanwha Financial, centering on Hanwha Life.
On March 31, Hanwha Group Chairman Kim Seung-yeon announced he would gift half (11.32%) of his 22.65% stake in Hanwha to his three sons.
Among the 11.32% gifted, Kim Dong-kwan, Vice Chairman of Hanwha, who leads the group’s manufacturing and defense sectors, received 4.86%. Kim Dong-won, President of Hanwha Life and responsible for the group’s financial businesses, and Kim Dong-sun, Executive Vice President of Hanwha Galleria, in charge of distribution and leisure sectors, each received 3.23%.
Hanwha serves as the de facto holding company within the Hanwha Group, and this equity transfer is widely interpreted as part of a succession plan.
Business circles see this move as a clear sign of the establishment of a “third-generation owner-led” management system, and it has reignited speculation that Hanwha Group may transition to a formal holding company structure.
Currently, Hanwha Group does not officially operate under a holding company structure.
However, since Chairman Kim’s three sons have been receiving management training in their respective sectors, the possibility of separating affiliates through a holding company conversion has long been considered.
Among the three, Kim Dong-won is expected to be the most affected by such a transition. If the group adopts a holding company structure, the principle of separation between industrial and financial capital would require the financial subsidiaries under Kim’s control to be fully separated from the group.
If Kim proceeds with the separation of Hanwha Financial, it is expected to be centered around Hanwha Life, the company where he currently works.
Hanwha Group’s financial affiliates are already structured under a vertically integrated system with Hanwha Life at the top.
According to the 2024 business report, Hanwha Life holds controlling stakes in several financial affiliates, including Hanwha Life Financial Services (88.9%), a corporate general agency (GA); Hanwha General Insurance (63.3%); Hanwha Asset Management (100%); and Hanwha Savings Bank (100%).
Additionally, Hanwha General Insurance controls Carrot General Insurance, and Hanwha Asset Management controls Hanwha Investment & Securities, forming a vertically integrated structure.
The governance structure of Hanwha Group’s financial affiliates was streamlined in October 2023, when Hanwha Life acquired the full stake in Hanwha Savings Bank from Hanwha Global Asset. This move allowed Hanwha Life to exert influence over all financial subsidiaries within the group.
Previously, Hanwha Savings Bank had been a subsidiary of Hanwha Global Asset, which is based on manufacturing and not classified as a financial company.
Even though the governance structure has been simplified, Kim still faces several challenges before he can push for a full separation of the group’s financial affiliates.
First and foremost, Kim needs to increase his ownership stake in Hanwha Life to strengthen his control.
As of the end of 2024, Kim holds 300,000 shares of Hanwha Life, representing a 0.03% stake. Even if one considers his indirect influence through ownership in Hanwha, the largest shareholder of Hanwha Life, his effective stake amounts to only about 0.23%.
Industry insiders predict that Kim could secure funding to acquire more shares in Hanwha Life if Hanwha Energy, in which he and his brothers hold stakes, goes public. However, the IPO process will take time.
Some observers argue that it is premature to discuss a financial affiliate separation, considering the time required for Kim to secure funds and the conservative nature of the financial sector compared to other industries.
A financial industry insider stated, “Among financial businesses, the insurance sector is especially conservative and heavily regulated,” adding, “It will be difficult to push for a swift separation of financial affiliates from the group, and this should be viewed with a long-term perspective.”
Born in 1985, Kim has been laying the groundwork for a stable succession by achieving results in the global financial market while working at Hanwha Life for over a decade. However, he has not yet been appointed as an internal director.
He joined Hanwha L&C in 2014, began his career as the head of the Digital Team at Hanwha Group’s Strategy and Planning Office, then transferred to Hanwha Life in December 2015. There, he served as Deputy Head of the Corporate Innovation Office, and was later promoted to Senior Managing Director, Executive Director, and Executive Vice President. In February 2023, he was promoted to President and appointed as Chief Global Officer.
#HanwhaGroup #HanwhaLife #KimDongwon #financialseparation #holdingcompany #succession #financialsector #HanwhaFinancial #HanwhaEnergy #governancestructure
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- Crying Then Smiling: Samsung Semiconductor Profit to Soar from Q1 to Q4
- Samsung Electronics is estimated to have posted sluggish earnings in the first quarter of 2025 due to the off-season effect in the semiconductor sector, a decreased share of high-bandwidth memory (HBM) revenue, and continued losses in the foundry (semiconductor contract manufacturing) business.
However, with prices of general-purpose DRAM and NAND flash beginning to rebound and expectations for the supply of HBM3E 12-layer chips in the second half of the year, along with increased memory capacity in smartphones, semiconductor profits are forecast to surge later this year.
Operating profit from semiconductors, which is expected to reach only around KRW 300 billion (US$ 216 million) in the first quarter, is projected to rebound sharply to over KRW 8 trillion (US$ 5.77 billion) in the fourth quarter, becoming the main driver of Samsung Electronics’ overall performance this year.
On April 1, financial information provider FnGuide estimated Samsung Electronics’ first-quarter earnings consensus (average projections by securities firms) on a consolidated basis to be KRW 77.12 trillion (US$ 55.6 billion) in revenue and KRW 5.16 trillion (US$ 3.72 billion) in operating profit.
Compared to the same period last year, revenue is expected to grow by 7.23%, while operating profit would drop by 21.94%. The consensus for full-year 2025 operating profit stands at KRW 31.46 trillion (US$ 22.7 billion), down 4% from last year.
Samsung Electronics is expected to announce its preliminary first-quarter earnings as early as April 7.
Recently, several securities firms have projected Samsung Electronics’ first-quarter operating profit to fall short of even KRW 500 billion (US$ 360 million).
NH Investment & Securities estimated Samsung Electronics' first-quarter operating profit at KRW 4.74 trillion (US$ 3.42 billion). It also projected the operating profit from the semiconductor (DS) division to be only KRW 307 billion (US$ 221 million).
Ryu Young-ho, a researcher at NH Investment & Securities, said, “Samsung Electronics is expected to hit its annual low point in the first quarter due to a reduced share of HBM revenue, which drove DRAM sales growth in Q4 last year, weak NAND flash performance, and foundry losses,” adding, “This weak first quarter has already been anticipated.”
Lee Su-rim, a researcher at Daishin Securities, also diagnosed that “continued losses from low utilization rates in the foundry sector and the shift to losses due to inventory adjustments and production cuts in NAND flash are the main factors behind the deterioration of Samsung Electronics’ Q1 performance.”
However, investors are paying more attention to the rebound in memory semiconductor prices than to the poor earnings.
According to market research firm DRAMeXchange, the fixed transaction price of high-performance DDR5 (DDR5 16Gb 2Gx8) DRAM as of March 31 was US$ 4.25, up 11.84% from February. NAND flash prices have also been rising for three consecutive months since January.
Market research firm TrendForce forecast that prices of DRAM, including HBM, will increase by up to 8% in the second quarter compared to the first quarter, while NAND flash prices could rise by up to 5%.
Due to a supply shortage where DRAM and NAND flash production cannot meet customer demand, urgent orders from clients are said to be increasing rapidly. As a result, Samsung Electronics is expected to push for price hikes in DRAM and NAND from April.
△ DS Division Performance to Improve in Second Half
Samsung Electronics' DS division is likely to see greater performance improvements in the latter half of the year.
Mass production of fifth-generation HBM, known as HBM3E 12-layer, is expected to begin as early as the third quarter, with supply to NVIDIA to follow. Samsung Electronics has redesigned the DRAM used in HBM3E and aims to pass the HBM3E 12-layer quality test in the second quarter of this year.
Vice Chairman Jeon Young-hyun, head of Samsung Electronics’ DS division, said during the regular shareholders' meeting on March 19, “Due to a delayed initial response to the AI semiconductor market, profitability improvements in memory products have also been delayed,” adding, “Starting from the second quarter or, at the latest, the second half of this year, we will shift to HBM3E 12-layer production and ramp up output to meet customer demand.”
The expansion of memory capacity in the iPhone 17 is another factor boosting expectations for improved performance at Samsung Electronics.
The iPhone 17 series, which Apple is set to unveil in the second half of this year, is expected to increase DRAM capacity from the current 8 gigabytes (GB) to 12GB in order to support the operation of its AI system, “Apple Intelligence.”
Kim Dong-won, a researcher at KB Securities, said, “The increase in memory capacity in the iPhone 17 will serve as a catalyst for future mobile DRAM demand,” predicting that “the demand growth rate for DRAM and NAND from 2025 to 2026 (15%) will exceed the supply growth rate (10%).”
KB Securities projected that Samsung Electronics' DS division operating profit will surge from KRW 2.8 trillion (US$ 2.02 billion) in the second quarter to KRW 6.3 trillion (US$ 4.54 billion) in the third quarter and KRW 8.1 trillion (US$ 5.84 billion) in the fourth quarter.
Even U.S. investment bank Morgan Stanley, which had been negative on the memory semiconductor sector, recently raised its target price for Samsung Electronics from KRW 65,000 to KRW 70,000.
Morgan Stanley researcher Shawn Kim said, “The expansion of the AI semiconductor market beyond the U.S. to other regions could work in Samsung Electronics’ favor,” adding, “Its strong financial structure provides excellent defense against economic downturns.”
#SamsungElectronics #semiconductor #HBM3E #DRAM #NANDflash #foundrybusiness #smartphones #AIchip #iPhone17 #memorymarket
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- Chung Eui-sun’s ‘Innovation DNA’ Powers Energy Drive as Hyundai E&C’s Lee Han-woo Boosts Profitability
- Lee Han-woo, CEO of Hyundai Engineering & Construction, is bringing Hyundai Motor Group Chairman Chung Eui-sun’s “innovation DNA” into the energy business.
As Lee takes the lead in innovating the industry by building a nuclear power-centered energy value chain, attention is focused on whether this will lay the groundwork for achieving Hyundai E&C’s highest-ever target operating profit margin of 8%.
According to Hyundai E&C on March 31, Lee has set a plan to generate more than one-fifth of the company’s total revenue from the energy sector within five years on a standalone basis.
In numbers, this means over KRW 5.1 trillion (US$ 3.68 billion), or 21% of the company’s projected KRW 25 trillion (US$ 18.03 billion) in total revenue by 2030.
Considering that this year’s energy revenue target stands at about 3% of total sales, or approximately KRW 470 billion (US$ 339 million), it is an aggressive goal to increase that by more than tenfold in just five years.
During the company’s first-ever “CEO Investor Day,” held on March 28—the first of its kind for a listed construction firm—Lee introduced three key growth strategies under the name “H-Road”: energy transition leadership, expanding global market dominance, and enhancing core products and intrinsic competitiveness. Notably, energy was placed first.
Lee stated, “We aim to successfully implement H-Road and grow our annual order volume from KRW 17.5 trillion (US$ 12.62 billion) in 2025 to KRW 25 trillion (US$ 18.03 billion) by 2030,” adding, “In particular, we will increase the share of energy revenue to 21%.”
The inclusion of CFO Kim Do-hyung and New Energy Business Division Head Choi Young, alongside CEO Lee as presenters at the event, is interpreted as a sign of Hyundai E&C’s strong commitment to expanding its energy business.
Lee’s energy strategy can be summarized as taking the lead in innovation to secure early dominance in the market as a “first mover.”
Hyundai E&C anticipates the global energy market will grow from 26,700 TWh in 2021 to as much as 66,000 TWh by 2051—more than double—making now the right time to lead in the energy sector.
The company plans to focus on nuclear power and renewable energy, which are gaining attention amid rising energy demand and concerns over energy security and supply stability.
Hyundai E&C aims to establish a comprehensive energy value chain encompassing production, storage, transportation, and utilization by expanding its influence from large-scale nuclear plants to small modular reactors (SMRs) and hydrogen production plants, while also introducing new package solutions.
Lee especially positions the nuclear business, backed by Hyundai E&C’s strong construction capabilities, as the centerpiece for leading energy innovation.
Hyundai E&C has a long history in nuclear power: from Korea’s first nuclear plant, Kori Unit 1 in 1971; to Hanbit Units 3–6, the first Korean-led project; to the first pressurized heavy water reactors, Wolsong Units 1 and 2; and to the first Korean-designed reactors, Saeul Units 1 and 2. With Shin Hanul Units 1–4, the company has now built 20 large reactors as lead contractor.
In addition, it has experience constructing 10 reactors simultaneously, participated as lead contractor for the UAE’s Barakah Units 1–4—the first nuclear export project from Korea—and is now pursuing the Kozloduy Units 7 and 8 project in Bulgaria, the first AP1000 deployment in Europe. The company is also working to gain a foothold in SMRs and nuclear decommissioning and remodeling.
Starting this year, Hyundai E&C plans to finalize the EPC contract for the Kozloduy Units 7 and 8 and begin construction on the U.S. SMR project, which it became the first Korean builder to design for commercialization.
Looking to the future, it is actively conducting joint research with the Korea Atomic Energy Research Institute on fourth-generation SMRs such as molten salt reactors (MSR) and sodium-cooled fast reactors (SFR), as well as nuclear-based hydrogen production and decommissioning.
Some view Lee’s energy leadership strategy as a sign that Chung Eui-sun’s vision for the group is extending to its construction affiliates.
In the business world, many attribute the Hyundai Motor Group’s success—now in Chairman Chung’s fifth year—to his “first mover” strategy.
Hyundai Motor and Kia sold 7.23 million vehicles globally last year, ranking third in market share.
While the group had long remained around fifth place globally, except for a brief rise to fourth in 2020, it climbed to third in 2022 and has maintained the spot for three consecutive years.
Hyundai’s development of the E-GMP dedicated electric vehicle platform, which allowed the group to take early leadership in the global EV market and enhance its brand image, as well as its technological leadership in hydrogen vehicles, are considered key achievements of Chairman Chung.
In his inauguration speech in October 2020, Chung emphasized core values like a “creative group spirit that makes the impossible possible” and a “pioneer” mindset. In his New Year’s message this January, he stated, “We’ve continually transformed ourselves to pursue change and innovation, and we possess the Hyundai Motor Group DNA to overcome any challenge or adversity.”
Lee’s push for leadership in energy is seen as a strategy to shift the paradigm of a construction industry facing growth limits and to ensure stable profitability.
The residential business, which has long been the core of Korea’s large construction firms, has entered a phase where notable growth is no longer feasible. With ongoing construction cost hikes, even serving as a cash cow is becoming difficult.
Hyundai E&C’s highest operating profit margins in the past decade were 6.2% consolidated and 5.3% standalone in 2016. On average, margins have remained below 4%.
Considering Lee’s goal of achieving an 8% operating margin by 2030 both on a consolidated and standalone basis, expectations are high for the energy business.
Given the company’s solid profits from past nuclear projects, Hyundai E&C is expected to achieve even better profitability by positioning itself as a leader across the entire energy value chain.
Over the past 10 years, Hyundai E&C has earned an average annual revenue of KRW 346.3 billion (US$ 249.6 million) and a gross profit of KRW 29.7 billion (US$ 21.4 million) from large-scale nuclear projects, with a gross profit margin of 8.6%.
In addition to focusing on energy-driven growth, Hyundai E&C is also emphasizing the establishment of a sophisticated management system as a strategy to secure profitability.
The securities industry also holds a positive view of Hyundai E&C’s energy-centered future strategy.
Shin Dae-hyun, an analyst at Kiwoom Securities, said, “Hyundai E&C’s 2030 operating profit target may appear high, but considering its strong position in Seoul-based redevelopment and complex projects, along with its shift away from simple construction toward nuclear dominance, the company is likely to surpass its recent low-single-digit margin levels.”
Kim Se-ryeon, an analyst at LS Securities, commented, “Given the limits of growth in Korea’s housing market, the gap will widen between companies that find new growth engines and those that don’t,” adding, “Hyundai E&C’s financial goals appear realistic, based on tangible business areas like large-scale nuclear, SMRs, and domestic development projects.”
At the CEO Investor Day, Lee said of the nuclear business, “We are expanding our partnerships with global companies across Bulgaria, the U.S., and Europe. We possess the flexibility of nuclear technology that can be applied to various industries,” adding, “Through international cooperation, we aim to go beyond simple EPC and jointly explore new business opportunities while providing optimal solutions.”
#HyundaiEandC #LeeHanwoo #ChungEuisun #nuclearenergy #SMR #energytransition #Hroadstrategy #constructionindustry #HyundaiMotorGroup #cleanenergyinitiative
