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- Kiwoom Securities Eyes ‘1 Trillion Club’ as Eom Ju-sung Defends No.1 Spot
- Kiwoom Securities recorded strong performance last year, but the celebration may not last long.
This is because Kiwoom Securities’ dominance as the No.1 player in the retail (individual investor) market is being challenged by competitors, and CEO Eom Ju-sung is working tirelessly to defend the company’s position.
According to the Financial Supervisory Service on the 7th, Kiwoom Securities posted a consolidated operating profit of KRW 1.0982 trillion last year, marking its return to the “1 Trillion Club” after three years.
Since Mirae Asset Securities first surpassed KRW 1 trillion in operating profit in 2020, the "1 Trillion Club" has become a benchmark for top-tier securities firms.
As a result, Kiwoom Securities’ operating profit surged 94.50% year-on-year in 2024, while net profit also increased 89.43% to KRW 834.8 billion.
Kiwoom Securities has long maintained a 30% market share in domestic stock brokerage, securing its No.1 position.
However, last year, the average daily trading volume of domestic stocks steadily declined, from KRW 24.9 trillion in Q1 to KRW 24.3 trillion in Q2, KRW 22.5 trillion in Q3, and finally KRW 19.7 trillion in Q4.
As a result, Kiwoom Securities saw a decrease in domestic stock brokerage commissions, but this gap was filled by overseas stock trading. By September 2023, Kiwoom Securities ranked No.1 in overseas stock brokerage with a 20.4% market share.
At the end of 2023, the average daily trading volume of overseas stocks was around KRW 2 trillion, but this figure more than doubled to over KRW 4 trillion in Q4 last year.
This shift is attributed to individual investors moving away from the disappointing domestic stock market in favor of U.S. stocks, which have shown stronger performance.
Since brokerage fees for overseas stock transactions are often several times higher than those for domestic stocks, this trend has ironically turned into an opportunity for securities firms.
As a result, Kiwoom Securities outperformed larger competitors, such as NH Investment & Securities (KRW 901 billion) and KB Securities (KRW 780.7 billion) in operating profit.
However, the increasing demand for overseas stocks has also intensified competition, threatening Kiwoom Securities’ market position—a challenge that has become a major concern for CEO Eom.
For example, Meritz Securities recently introduced a zero-commission policy for overseas stock trading, sending shockwaves through the industry.
As Meritz Securities' overseas stock brokerage balance surged, other competitors also started considering fee reductions or waivers, fueling concerns of an impending price war that could erode profitability for major players like Kiwoom Securities.
Moreover, Toss Securities, which played a key role in popularizing fractional overseas stock investing, has now overtaken Kiwoom Securities in some aspects.
According to Daishin Securities, Kiwoom Securities lost its No.1 position in overseas stock brokerage to Toss Securities in November 2023.
Daishin Securities analyst Park Hye-jin lowered Kiwoom Securities' target stock price from KRW 180,000 to KRW 160,000, warning that "since major securities firms are aggressively entering the overseas stock market, Kiwoom Securities’ stock price will depend on whether it can defend its market share."
In response, CEO Eom Ju-sung has been busy restructuring Kiwoom Securities’ retail business since the beginning of the year.
To regain overseas brokerage market share, Kiwoom Securities launched a "100% Guaranteed U.S. Big Tech Stock Lottery Event" on April 4.
This event offers fractional shares of seven major U.S. stocks (Apple, Amazon, Alphabet, Meta, Tesla, Microsoft, Nvidia) to new U.S. stock traders or customers who haven’t traded U.S. stocks for at least three months before the event start date.
Additionally, Kiwoom Securities announced plans to expand its “Stock Savings” service to U.S. stocks by the end of this month.
This service, similar to a stock installment plan, allows investors to purchase stocks on a fixed date each month, mimicking a savings account approach. It has been a key offering of fintech-based securities firms like Toss Securities.
Meanwhile, Kiwoom Securities has completed preparations for the launch of an Alternative Trading System (ATS) on May 4 by setting up its own Smart Order Routing (SOR) system.
The SOR system enables securities firms to automatically route customer orders to either the traditional stock exchange or the ATS, ensuring the most favorable transaction conditions. Currently, Kiwoom Securities is the only securities firm in Korea that has implemented this system.
Given the significant impact that the ATS launch is expected to have on the retail market, Kiwoom Securities' swift preparation reflects CEO Eom’s urgency in staying ahead of competitors.
Eom Ju-sung was born in 1968 and graduated from Siheung High School (now Geumcheon High School) before earning a degree in Applied Statistics from Yonsei University. He later obtained a Master’s degree in Investment Management from the KDI School of Public Policy and Management.
He began his career at Daewoo Securities in 1993 and joined Kiwoom Securities in 2007, where he held key roles in Proprietary Investment (PI), Investment Management, and Strategic Planning. In January 2024, he was appointed CEO of Kiwoom Securities.
#KiwoomSecurities #EomJusung #RetailMarket #StockBrokerage #OverseasInvestment #FinancialMarkets #SecuritiesIndustry #AlternativeTradingSystem #InvestmentBanking #MarketCompetition
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- Yuhan CEO Cho Wook-je Faces U.S. Delays, Eyes European Market for 'Leclaza'
- Yuhan Corporation CEO Cho Wook-je is expected to mitigate the delay in U.S. royalties for the non-small cell lung cancer treatment 'Leclaza' (ingredient: Lazertinib) by expanding into the European market.
Cho is anticipating an increase in market penetration for Leclaza through a combination therapy with the subcutaneous injection formulation of Rybrevant (ingredient: Amivantamab), following its existing combination with the intravenous injection formulation. While approval for the subcutaneous version of Rybrevant has been delayed in the U.S., there is a strong possibility that sales will expand first in Europe.
According to the pharmaceutical and biotech industry on the 7th, Leclaza is expected to soon be used in combination with the subcutaneous (SC) formulation of Rybrevant in Europe.
On the 4th, Johnson & Johnson subsidiary Janssen announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) had recommended expanding the marketing authorization for the combination therapy of Rybrevant SC and ‘Lacruze’ (the overseas brand name for Leclaza).
This recommendation is widely interpreted as being in the final approval stage. Given that in December last year, Leclaza received CHMP’s recommendation for combination therapy with Rybrevant and then secured European Commission (EC) approval within a month, it is expected that this new approval will also be granted swiftly. If the combination therapy with the subcutaneous injection formulation is approved following the approval of the intravenous version in late 2024, Leclaza’s market penetration in Europe is expected to accelerate significantly.
Rybrevant SC significantly reduces administration time compared to the existing intravenous (IV) formulation. While the IV version requires approximately five hours for infusion, the subcutaneous injection can be administered in just about five minutes. Additionally, infusion-related reactions (IRR) were found to be five times lower than with the IV formulation.
Switching to a subcutaneous combination therapy improves efficacy, side effects, and convenience compared to the IV method. If Rybrevant SC receives approval, it is expected to positively impact Leclaza’s market share expansion.
This year, Yuhan Corporation is projected to receive a milestone payment of US$ 30 million (KRW 44 billion) for Leclaza’s European launch, along with approximately 10% in sales royalties. If the subcutaneous formulation gains market traction quickly, royalty revenues could increase further.
However, the delay in Rybrevant SC’s approval in the U.S., the largest market, is a disappointment. While the intravenous combination therapy was approved in the U.S. before Europe, the delay in the subcutaneous formulation’s approval has slowed the pace of market expansion.
Leclaza received U.S. Food and Drug Administration (FDA) approval for combination therapy with Rybrevant IV in August 2024 and began sales in the third quarter of the same year. While obtaining approval for the subcutaneous formulation would further accelerate market penetration, the delay in approval has postponed potential opportunities.
Unlike in Europe, Johnson & Johnson received a Complete Response Letter (CRL) from the FDA in December 2024 regarding Rybrevant SC in the U.S. Following a CRL, additional documents must be submitted, and the FDA’s reassessment is expected to take about six months from the submission date.
A Yuhan Corporation representative stated, “According to Johnson & Johnson, the CRL was related to findings during a standard pre-approval inspection of the manufacturing facility,” adding, “Janssen is handling the documentation and approval process, so we cannot provide further details.”
The securities industry believes that Rybrevant SC will eventually receive approval, considering it to be only a matter of timing. While the delay is unfortunate, the issue is related to facility inspections rather than additional clinical trials, which is unlikely to affect the approval outcome.
The results of the global Phase 3 trial (MARIPOSA) for combination therapy in non-small cell lung cancer, jointly conducted by Yuhan Corporation and Janssen, are expected to serve as supporting evidence. The trial showed that while the median overall survival (mOS) for AstraZeneca’s Tagrisso was 38.6 months, the Leclaza combination therapy extended survival by more than a year. Given that the average life expectancy for lung cancer patients is around three years, these results are highly significant.
Kwon Hae-soon, an analyst at Eugene Investment & Securities, stated, “The results of the MARIPOSA trial are expected to be officially presented at the 2025 American Society of Clinical Oncology (ASCO) conference in late May,” adding, “Based on the strong therapeutic efficacy, the FDA’s formal approval of the Leclaza and Rybrevant SC combination therapy is anticipated, along with the commencement of full-scale marketing efforts.”
Kiwoom Securities analyst Heo Hye-min commented, “If overall survival (OS) data is revealed and Rybrevant SC receives approval, prescriptions for Leclaza combination therapy are expected to increase rapidly.” She also noted that AstraZeneca’s Tagrisso established itself as the standard treatment for non-small cell lung cancer after demonstrating an OS extension of approximately 6.8 months compared to first-generation EGFR TKIs, suggesting that Leclaza could follow a similar trajectory.
#YuhanCorporation #Leclaza #ChoWookje #Rybrevant #LungCancer #FDAApproval #EMAApproval #Biopharmaceuticals #ClinicalTrials #PharmaceuticalMarket
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- Hanwha Solutions Reports First Annual Loss—Kim Dong-kwan Bets on Solar and Cable Materials for a Turnaround
- Hanwha Solutions reported its first annual operating loss last year since its establishment in 2020 through the merger of Hanwha Chemical and Hanwha Q CELLS & Advanced Materials.
Vice Chairman Kim Dong-kwan is looking to reverse the company’s fortunes this year by leveraging the growing momentum of its solar business in the U.S. and expanding into ultra-high-voltage cable materials.
On the 6th, Hanwha Solutions announced that it recorded KRW 12.394 trillion (US$ 8.94 billion) in revenue and an operating loss of KRW 300.2 billion (US$ 216.5 million) on a consolidated basis last year.
Compared to revenue figures from 2022 at KRW 12.9322 trillion (US$ 9.32 billion) and 2023 at KRW 13.0785 trillion (US$ 9.43 billion), the decline was not significant. However, the company had previously posted operating profits of KRW 922.5 billion (US$ 665.1 million) in 2022 and KRW 579.2 billion (US$ 417.6 million) in 2023, making last year’s shift to an operating loss a significant setback.
This marks the first time since its launch in 2020 that Hanwha Solutions has recorded an annual operating loss, primarily due to challenges in its core businesses: solar energy and chemicals.
Last year, Hanwha Solutions generated revenue of KRW 5.7658 trillion (US$ 4.16 billion) from its renewable energy (solar) segment and KRW 4.8172 trillion (US$ 3.47 billion) from its chemical segment. However, both segments posted operating losses of KRW 257.5 billion (US$ 185.8 million) and KRW 121.3 billion (US$ 87.5 million), respectively.
This is a sharp contrast to 2022, when Hanwha Solutions posted an all-time high profit, with its chemical segment alone generating KRW 590 billion (US$ 425.4 million) in operating profit and its renewable energy segment adding KRW 368.6 billion (US$ 265.8 million).
In 2023, amid an industry-wide downturn, the chemical segment's operating profit shrank to KRW 60.7 billion (US$ 43.8 million), but the renewable energy business set a record with KRW 539.8 billion (US$ 389.2 million) in operating profit, accounting for the bulk of the company's total earnings.
For Vice Chairman Kim, expectations are high that business conditions will improve in the U.S., the key market for Hanwha’s solar business. This could ease the pressure on him to drive a rapid financial recovery.
Hanwha Solutions has been actively expanding into the U.S. market, including building its own manufacturing facilities, but has struggled against low-cost Chinese solar imports.
However, with newly inaugurated U.S. President Donald Trump adopting a favorable stance toward solar energy while intensifying trade restrictions against China, Hanwha Solutions anticipates stronger competitiveness and higher market prices.
Kim attended Trump’s inauguration in January and was also present at exclusive VIP events, further fueling market expectations for Hanwha Group’s expansion in the U.S.
Baek Young-chan, a researcher at SangSangin Securities, commented on the outlook for the U.S. solar module market, stating, “Current inventory levels in the U.S. solar module market are estimated at 20–30 GW. Given that import volumes are likely to decline due to tariffs, supply will become extremely tight in the second half of the year. As a result, solar module prices in the U.S. are expected to rise in the latter half of 2024.”
Meanwhile, in the chemical segment, where overall industry conditions are expected to remain sluggish, Kim appears to be focusing on specialized high-value products where Hanwha Solutions has a competitive edge.
The company recently completed an expansion of its caustic soda production facilities, increasing its annual production capacity from 850,000 tons to 1.11 million tons.
Caustic soda is widely used across various industries, from advanced sectors like semiconductors and battery cathodes to textiles and soap manufacturing. While the prices of many general-purpose materials have fallen sharply, caustic soda prices remained strong, reaching a 21-month high of USD 475 per ton in November 2023.
A Hanwha Solutions representative commented on the market outlook for caustic soda, stating, “Demand is expected to improve gradually in the second half of the year, particularly from the electric vehicle-related industries.”
Kim has also introduced a new strategy in the chemical sector by expanding into the "ultra-high-voltage cable materials" market.
In December 2023, Hanwha Solutions spun off its polyolefin (PO) business from the chemical segment and established the new W&C (Wire & Cable) business division. In January 2024, it further elevated W&C to a full-fledged business segment.
The W&C segment's flagship product is cross-linked polyethylene (XLPE) for 400 kV (kilovolt) ultra-high-voltage and submarine cables, which Hanwha Solutions successfully localized for the first time in South Korea.
This move is seen as a strategic response to increasing global demand for electricity transmission infrastructure, driven by the expansion of artificial intelligence and the electrification of industries.
Hanwha Solutions also appointed Carlo Scarlata, former Chief Commercial Officer (CCO) of Prysmian, as the head of the W&C business segment. Prysmian, an Italian company, is the world’s largest cable manufacturer.
#HanwhaSolutions #KimDongKwan #solarenergy #USmarket #TrumpPolicies #causticsoda #chemicalindustry #ultrahighvoltagecables #energytransition #Koreanbusiness
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- KB Financial's Yang Jong-hee Achieves KRW 5 Trillion Profit—Can He Fix Internal Controls?
- Yang Jong-hee, chairman of KB Financial Group, set multiple new records in his first year in office.
KB Financial became the first financial holding company in South Korea to achieve an annual net profit of KRW 5 trillion (US$ 3.61 billion). Additionally, fueled by its value-up strategy, KB Financial became the first domestic bank stock to surpass KRW 100,000 (US$ 72) per share.
According to securities industry analysis on the 6th, KB Financial demonstrated the strengths of its diversified portfolio and earnings potential through strong performances from its non-banking subsidiaries last year. While the company faced criticism over capital ratios and the scale of its share buybacks, its financial strength and capital superiority remained unchanged.
Na Min-wook, a researcher at DB Financial Investment, stated in a report, “The lower-than-expected scale of KB Financial’s share buyback is more of a strategic adjustment than a lack of capacity.”
Eun Kyung-wan, a researcher at Shinhan Investment Corp., commented, “KB Financial is likely to see some dilution in its stock premium due to a decline in its capital ratio. However, it still possesses the strongest earnings power and capital strength in the financial sector, and since there has been no forced asset reduction, an expansion of share buybacks in the latter half of the year is expected.”
On the previous day, KB Financial announced that its consolidated net profit attributable to controlling shareholders for 2024 was KRW 5.0782 trillion (US$ 3.66 billion). This marks the first time that any domestic financial holding company has reached the KRW 5 trillion (US$ 3.61 billion) threshold in annual net profit.
The profit gap between KB Financial and its competitor Shinhan Financial widened significantly. Shinhan Financial reported a net profit of KRW 4.5175 trillion (US$ 3.26 billion), nearly tripling the gap compared to 2023, when KB Financial led by KRW 195.4 billion (US$ 141 million).
KB Financial increased the contribution of its non-banking subsidiaries—securities, credit cards, and insurance—to approximately 40% of total earnings, with all of these units recording double-digit growth. Meanwhile, Shinhan Financial suffered from weak non-banking performances.
Chairman Yang Jong-hee proved his non-banking sector expansion strategy was successful by achieving a record-breaking KRW 5 trillion (US$ 3.61 billion) in net profit in his first year in office.
KB Financial’s strong business fundamentals, including the stability of its banking and non-banking portfolios, also supported its value-up strategy.
On October 24, 2024, the day after Chairman Yang announced his value-up plan during the third-quarter earnings conference call, KB Financial’s stock price surged by 8.26%, reaching KRW 101,000 (US$ 72.8). On December 3, it again rose above the KRW 100,000 (US$ 72) mark.
This milestone was a first, not only among the four major financial groups but also in the history of South Korean banking stocks.
Securities analysts believe KB Financial’s ability to differentiate itself from competitors last year was largely due to market confidence in its shareholder return policy and overall value-up execution.
It has earned a reputation as the “model student” of the value-up strategy.
However, while strong earnings and a rising stock price were the bright side of KB Financial’s year, the company also had a dark side—it recorded the highest number of financial accidents among major financial institutions.
According to the 2024 regular inspection report on financial holding companies and banks released by the Financial Supervisory Service (FSS), KB Kookmin Bank, KB Financial’s largest subsidiary, issued KRW 89.2 billion (US$ 64.3 million) in improper loans across 291 cases last year.
Although the total amount was lower than Woori Bank’s KRW 233.4 billion (US$ 168.3 million), KB Kookmin Bank had far more incidents than Woori Bank (101 cases) and NH NongHyup Bank (90 cases).
In the FSS inspection, KB Financial was criticized for having a weak audit system at individual branches and for failing to promptly incorporate financial crime alerts into its risk detection systems.
Additionally, in some cases of fraudulent loan schemes involving developers and brokers, branch employees were found to have accepted bribes and entertainment benefits. There were also cases where improperly trained employees recommended and sold complex financial derivatives, as well as instances of poor management of customers’ personal credit information.
These findings revealed significant weaknesses in KB Financial’s internal control system.
Moreover, concerns were raised about KB Financial’s indirect financial support for KB Bank Indonesia (formerly Bank Bukopin) through the absorption of bad assets, as well as procedural deficiencies in liquidity support decisions for overseas subsidiaries. These issues suggest that management may bear direct responsibility.
During KB Financial Group’s 16th-anniversary ceremony in September 2023, Chairman Yang Jong-hee stated, “We must preserve unchanging values while boldly transforming what needs to be changed. We must all embrace the ‘refresh’ management philosophy.”
On October 30, 2024, KB Financial submitted a newly structured accountability framework for internal controls to the FSS and later released a press statement emphasizing its commitment to "refreshing" the group’s entire internal control system.
The robust non-banking portfolio that supported KB Financial’s record-breaking performance was not built overnight.
Now, the focus shifts to what legacy Chairman Yang will leave at KB Financial beyond the KRW 5 trillion (US$ 3.61 billion) net profit milestone.
#YangJongHee #KBFinancial #netprofit #valueup #financialperformance #bankingstocks #shareholderreturns #financialcrimes #internalcontrols #SouthKoreanbanking
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- Lee Jae-yong Breaks Free, Eyes Jensen Huang Meeting – Global Robotics, Autonomous Vehicle Push
- Lee Jae-yong, the Chairman of Samsung Electronics, is expected to take bold steps in global management by meeting with the heads of major U.S. big tech companies to explore future growth businesses such as artificial intelligence (AI) semiconductors, robotics, and automotive electronics.
On February 3, a day after being acquitted in his appellate trial, Lee met with SoftBank Chairman Son Masayoshi and OpenAI CEO Sam Altman at Samsung’s headquarters in Seocho, Seoul, to discuss AI business cooperation.
There are also expectations that in March, Lee will personally meet with NVIDIA CEO Jensen Huang in the United States to discuss collaboration in AI semiconductors and other new business areas. Since both Samsung Electronics and NVIDIA consider AI, robotics, and automotive electronics as key future growth sectors, attention is focused on whether Lee and Huang will meet and what business cooperation might follow.
According to reports from the business sector on February 5, as Lee has effectively freed himself from the legal risks that lingered for more than eight years, he is expected to take full charge of Samsung Electronics' management and alleviate concerns about the company's future.
Although Lee officially assumed the chairmanship of Samsung Electronics on October 28, 2022, he was held back by legal risks and was unable to take the lead in making large-scale investment decisions for future new businesses.
On February 3, the day after his acquittal, Lee met with SoftBank Chairman Son Masayoshi and OpenAI CEO Sam Altman to discuss cooperation in AI semiconductors and data centers. Son reportedly proposed Samsung Electronics' participation in the "Stargate" project, which involves investing $500 billion (KRW 718 trillion or US$ 517.7 billion) to build a data center in the United States.
There are also predictions that Lee will meet NVIDIA CEO Jensen Huang around the time of NVIDIA's developer conference, "GTC 2025," which will be held in San Francisco in March.
Samsung Electronics is in urgent need of expanding its supply of high-bandwidth memory (HBM) for NVIDIA's AI semiconductors, where it currently lags behind competitors. Additionally, to revive its foundry (semiconductor contract manufacturing) business, which continues to suffer losses, securing NVIDIA as a customer is crucial.
Recently, NVIDIA announced that it would enter not only the AI semiconductor market but also robotics and autonomous vehicle businesses. Samsung Electronics also has strong ambitions to develop these sectors as its next-generation businesses. If the two companies agree on strategic cooperation, significant synergy is expected.
Previously, Han Jong-hee, Vice Chairman and Head of Samsung Electronics' DX Division, announced in September last year that the company would focus on developing four new businesses: robotics, automotive electronics, medical devices, and eco-friendly HVAC systems. Additionally, at the end of last year, Samsung Electronics increased its stake in the domestic robotics company Rainbow Robotics to 35%, effectively making it a subsidiary, signaling its full-fledged entry into the robotics business.
With AI semiconductor performance expected to determine market success in both the robotics and autonomous vehicle sectors, the collaboration between Samsung Electronics, with its strong hardware manufacturing capabilities, and NVIDIA, with its software design expertise, is seen as a powerful combination.
Robots and autonomous vehicles require power-efficient memory semiconductors due to their limited power supply. Samsung Electronics has a strong advantage in low-power LPDDR DRAM. Additionally, the company is reportedly developing "VCS DRAM," which stacks LPDDR DRAM like high-bandwidth memory (HBM), with plans to complete development by the first quarter of this year.
NVIDIA's "Jetson" and "Thor" chipsets, designed for the robotics market, use low-power LPDDR DRAM. If the two companies form a strategic alliance, Samsung Electronics, which has acquired Rainbow Robotics as a subsidiary, could source NVIDIA’s robotic chipsets to manufacture humanoid robots and other robotic systems.
Lee Jong-hwan, a professor at Sangmyung University’s Department of System Semiconductor Engineering, stated, "Lee Jae-yong's most crucial role is to meet with big tech leaders, promote cooperation, and maintain relationships," adding, "Just as he discussed the Stargate project, securing new business opportunities from U.S. big tech companies will be the fastest way for Samsung Electronics to overcome its crisis."
#Samsung #AI #semiconductor #LeeJaeyong #NVIDIA #robotics #autonomousvehicles #HBM #foundry #bigtech
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- GS E&C Boosts Stability with Profit Rebound, Huh Yoon-hong Faces Profitability Test in Year Two
- Huh Yoon-hong, the President and CEO of GS Engineering & Construction (GS E&C), quickly recovered from the financial shock of 2023 by turning a profit last year.
However, as GS E&C's profitability has yet to return to previous levels due to the deteriorating construction market, Huh is expected to face a true test of profitability recovery this year.
On February 5, GS E&C announced that its consolidated revenue for last year was KRW 12.86 trillion (US$ 9.28 billion), with an operating profit of KRW 286.2 billion (US$ 206.4 million) and a net profit of KRW 264.9 billion (US$ 191.0 million).
Compared to 2023, revenue increased by 2.0%, and the company returned to profitability with operating and net profits.
GS E&C achieved its highest-ever revenue of KRW 13.44 trillion (US$ 9.69 billion) in 2023 and initially set an even higher annual target of KRW 13.5 trillion (US$ 9.73 billion) for last year.
Although Huh did not reach the revenue target, he achieved a significant milestone in his first year as CEO by successfully restoring profitability.
The key issue surrounding GS E&C last year was restoring trust by overcoming the tarnished reputation associated with the so-called "Boneless Xi" scandal while ensuring stable operating profit.
Moreover, the company achieved record-breaking new orders, filling its backlog with nearly KRW 60 trillion (US$ 43.3 billion), securing work equivalent to more than four years' worth of revenue.
With concerns about slowing external growth alleviated, Huh now has the conditions to focus on improving profitability.
GS E&C recorded KRW 19.91 trillion (US$ 14.36 billion) in new orders last year.
In 2023, the company secured only KRW 10.18 trillion (US$ 7.34 billion), falling 29.8% short of its initial target of KRW 14.5 trillion (US$ 10.46 billion). However, new orders nearly doubled within a year, surpassing the previous record of KRW 16.07 trillion (US$ 11.60 billion) set in 2022.
Most business divisions of GS E&C expanded their new order volumes last year.
By division, new orders for 2023 were as follows: Architecture & Housing at KRW 9.71 trillion (US$ 7.00 billion), New Business at KRW 5.55 trillion (US$ 4.00 billion), Plant at KRW 3.01 trillion (US$ 2.17 billion), Infrastructure at KRW 1.12 trillion (US$ 810 million), and Green (Environmental) at KRW 512.5 billion (US$ 369.6 million).
The core Architecture & Housing division increased orders by 52.0% from the previous year, while the New Business segment saw a 183.2% increase, and the Plant division secured more than six times the previous year's orders. The Green division’s new orders surged by 246.2% compared to 2023, while the Infrastructure sector saw a slight 5.2% decrease.
The sharp increase in the Plant division’s new orders was driven by securing large-scale domestic and international projects, including Saudi Arabia’s Fadhili Gas Expansion Program Package 2 (KRW 1.60 trillion or US$ 1.15 billion) and the Northeast Asia LNG Hub Terminal Phase 1 Project (KRW 587.9 billion or US$ 424.0 million).
A notable trend last year was the sharp increase in GS E&C’s overseas orders.
The company secured KRW 11.37 trillion (US$ 8.20 billion) in domestic orders and KRW 8.54 trillion (US$ 6.16 billion) in overseas orders. While domestic orders increased by 47.3% year-over-year, overseas orders surged by 246.2%.
As of the end of last year, GS E&C’s order backlog stood at KRW 59.95 trillion (US$ 43.2 billion), up 10.6% from KRW 54.20 trillion (US$ 39.1 billion) at the end of 2023.
Huh successfully reversed the KRW 387.9 billion (US$ 279.7 million) operating loss from 2023, which resulted from the aftermath of the collapse of the underground parking lot at an apartment complex in Incheon’s Geomdan district and a subsequent rigorous cost review.
Huh has consistently emphasized "internal stability" in business operations, and it is now recognized that he has partially realized this goal.
GS E&C’s gross profit margin (GPM) for each quarter last year was recorded as 9.0% in Q1, 8.3% in both Q2 and Q3, and 9.1% in Q4, with an annual gross profit margin of 8.7%.
However, operating profit declined sharply in the fourth quarter. Quarterly operating profits were KRW 70.5 billion (US$ 50.8 million) in Q1, KRW 93.4 billion (US$ 67.4 million) in Q2, and KRW 81.8 billion (US$ 59.0 million) in Q3, before dropping to KRW 40.4 billion (US$ 29.1 million) in Q4.
This decline is attributed to the temporary costs reflected in overseas infrastructure projects, as anticipated by the securities industry. The cost ratio of the Infrastructure division worsened from 89.5% in Q3 to 104.4% in Q4.
Huh’s real test in terms of profitability is expected to come this year, his second year in office.
GS E&C proactively addressed the industry-wide issue of "clearing out financial burdens" mostly in Q4 of 2023, enabling a swift return to normal operations. However, rising construction costs have kept profitability at a relatively low level.
The company’s operating profit margin last year was 2.2%, significantly lower than during the industry’s boom period.
GS E&C’s highest-ever operating profit margin was recorded in 2018 at 8.1% when it first and only entered the "KRW 1 Trillion (US$ 721.0 million) Operating Profit Club." It remained a top performer in the construction industry with operating profit margins of 7.3% in 2019, 7.4% in 2020, and 7.1% in 2021. Even in 2022, it recorded 4.5%.
Given the current steep increase in construction costs, returning to past peak profitability levels immediately is challenging. However, considering GS E&C’s rare owner-driven management structure among major construction firms, Huh is likely aiming even higher.
This year is expected to be crucial for GS E&C in not only increasing operating profit but also solidifying a long-term trend of profitability improvement.
Specifically, the company plans to improve the cost ratio in the housing business while expanding revenue in the Plant division.
Last year, GS E&C recorded a cost ratio of 90.7% in the Architecture & Housing business, which is still not at a satisfactory level.
The company aims to achieve cost ratios of at least 85% for subcontracted projects and around 87% for redevelopment projects.
GS E&C intends to complete projects launched in 2021–2022, which have high costs, by the first half of 2026 to lower the cost ratio while focusing on site management.
The securities industry anticipates that GS E&C, which secured 22,098 housing units in 2023 and 16,445 units last year despite the real estate downturn, will be able to quickly improve profitability once cost ratios are reduced.
In the Plant division, as construction progresses on projects such as the Saudi Fadhili Project, the cost ratio improved from 91.3% in Q3 to 88.5% in Q4 last year.
GS E&C plans to expand annual revenue from the Plant division to around KRW 2 trillion (US$ 1.44 billion) as it improves profitability.
The company set a Plant division revenue target of approximately KRW 1.3 trillion (US$ 937.5 million) for this year, more than tripling last year’s KRW 425.7 billion (US$ 307.0 million).
GS E&C also set a new order target of KRW 14.3 trillion (US$ 10.32 billion) for this year, signaling its intent to maintain a pipeline of work exceeding annual revenue.
Although the company’s target for this year is lower than last year’s record-breaking performance, it is the second-highest annual target set in the past decade, following 2023’s KRW 14.5 trillion (US$ 10.46 billion).
GS E&C stated, "We will strengthen the fundamentals of the construction industry by focusing on safety and quality while enhancing our business foundation through selective and concentrated investment."
#GSE&C #construction #HuhYoonhong #profitability #housingmarket #plantbusiness #neworders #realestate #engineering #SouthKorea
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- 'Reclusive Leader' Lee Hae-jin Returns as Naver Board Chairman After 7 Years, Leading AI Competitiveness
- Lee Hae-jin, the founder of Naver and its Global Investment Officer (GIO), is expected to return as Chairman of Naver’s Board of Directors after seven years. With his return, Naver’s artificial intelligence (AI) business is anticipated to gain further momentum.
According to the information technology (IT) industry on the 5th, Naver plans to hold a board meeting this week to approve the agenda for Lee Hae-jin’s reinstatement as an internal director and present it as a proposal at the general shareholders' meeting.
The industry expects the shareholders' meeting to take place around the 7th. If the proposal is confirmed, Lee will reclaim the position of Board Chairman, which he stepped down from in 2017, after approximately seven years.
Since resigning as Chairman in 2017, Lee has focused on Naver’s overseas business, global investments, and new ventures. Since June 2019, he has rarely appeared at public events, earning the reputation of a “reclusive leader.”
However, his return to the forefront is seen as a strategic move to maintain leadership amid intensifying global AI competition. Given that Lee has consistently emphasized the importance of “Sovereign AI,” his return is expected to signal an aggressive push to secure dominance in the AI sector.
Competition has become even fiercer with the emergence of low-cost, high-performance AI models, such as "DeepSeek" from Chinese startups, in addition to the AI advancements led by U.S. tech giants like OpenAI. As a result, Naver faces increasing pressure to make strategic changes to strengthen its AI competitiveness.
Domestic competitor Kakao is also accelerating its AI expansion. Just a day prior, Kakao officially announced a partnership with OpenAI, aiming to enhance its service competitiveness through AI technology.
Lee has consistently shown a strong interest in AI-related issues.
In May last year, at the "AI Seoul Summit," he stated, “In the AI era, there must be responsible and diverse AI models that respect the culture and values of each region.” The following month, he and Naver CEO Choi Soo-yeon met with NVIDIA CEO Jensen Huang to discuss AI model development and potential collaborations.
As a result, expectations in the market regarding Lee’s return are high. On this day, Naver’s stock price surged to KRW 232,000 (US$ 167) during trading, marking a new 52-week high.
#LeeHaeJin #Naver #AI #artificialintelligence #businessstrategy #technology #OpenAI #competition #stockmarket #Korea
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- LG Chem Faces Growing Petrochemical Downturn, Shin Hak-cheol Accelerates High-Value Material Strategy
- LG Chem is facing a dire situation where it not only has to endure a prolonged downturn in the petrochemical sector but also reconsider its business structure.
For Vice Chairman and CEO Shin Hak-cheol, accelerating the transition of the company’s business portfolio toward high-value-added materials has become even more urgent.
According to securities industry analyses on April 4, LG Chem is expected to show a gradual recovery in performance this year.
In 2023, LG Chem recorded KRW 48.9161 trillion (US$ 35.3 billion) in revenue and KRW 916.8 billion (US$ 660.9 million) in operating profit. Compared to 2022, when revenue stood at KRW 55.25 trillion (US$ 39.8 billion), this marks an 11.46% decrease, while operating profit plunged 63.65% from KRW 2.529 trillion (US$ 1.82 billion).
The securities industry projects that LG Chem’s 2024 revenue will be around KRW 50 trillion (US$ 36.1 billion), with an operating profit of up to KRW 1.8 trillion (US$ 1.3 billion).
Considering that LG Chem achieved a record-high operating profit of over KRW 5 trillion (US$ 3.6 billion) in 2022, a significant rebound in 2024 seems unlikely.
Jeon Yoo-jin, a researcher at iM Securities, commented on LG Chem’s performance outlook, stating, "It is difficult to find a clear upward momentum for LG Chem at the moment. A long-term approach is necessary."
LG Chem’s sluggish performance is attributed to both the weakening battery-related businesses, such as LG Energy Solution and the cathode material sector, and a sharp decline in profitability in its core petrochemical division.
In 2023, the petrochemical business posted revenue of KRW 19.089 trillion (US$ 13.8 billion), a 7.2% increase year-over-year. However, the segment suffered an operating loss of KRW 136 billion (US$ 98 million), continuing a trend of deficits similar to 2022.
Most petrochemical companies, including LG Chem, are struggling with declining profitability due to increased production of basic chemicals such as ethylene in China, combined with a global economic downturn.
The ethylene spread, a key profitability indicator for petrochemical firms, has remained below the breakeven point of USD 300 per ton since 2022. As of the third quarter of 2024, it has fallen to the USD 180 per ton range.
Some analysts suggest that if former U.S. President Donald Trump intensifies tariff pressure on China, South Korean petrochemical companies could benefit from increased exports.
However, growing production of basic chemicals in the Middle East through crude oil-to-chemicals (COTC) facilities suggests that the decline in South Korean petrochemical companies is not merely a short-term issue but could represent a structural crisis.
COTC facilities allow direct ethylene production from crude oil, significantly lowering production costs compared to the traditional method of refining crude oil into naphtha before producing ethylene. According to the Korea Export-Import Bank, the ethylene production cost at Kuwait’s Al Zour COTC facility is approximately 30% lower than that of China’s already low-cost ethylene production.
Given these global changes, CEO Shin must act swiftly to navigate LG Chem out of its current downturn.
As the chairman of the Korea Petrochemical Industry Association, Shin has consistently emphasized the importance of shifting away from basic chemicals and expanding the portfolio of high-value-added materials.
At the Asia Petrochemical Industry Conference (APIC) in May last year, he stated, "For a long time, the petrochemical industry has grown in line with industrial cycles, focusing on commodity products. However, rapid external changes have made it difficult to sustain this approach. A transition to low-carbon, high-value-added products is absolutely necessary."
Under his leadership, LG Chem has taken steps to reduce its reliance on commodity petrochemicals. In March last year, the company suspended operations at its styrene monomer (SM) plant in Yeosu and demolished its SM plant in Daesan. It is also considering selling its no. 2 naphtha cracking center (NCC) in Yeosu.
To increase the proportion of high-value-added materials, LG Chem is converting two out of six PVC production lines at the Yeosu plant to produce ultra-high-molecular-weight PVC for EV charging cables.
The company is also expanding its portfolio with polyolefin elastomers (POE) for solar panels, styrene-butadiene rubber (SSBR) for EV tires, and C3-IPA, a semiconductor cleaning solution, to secure new growth drivers.
During a conference call on April 3 regarding fourth-quarter earnings, LG Chem stated, "We will continue restructuring our commodity business and expand our high-value pipeline to improve profitability."
In his New Year’s address, CEO Shin declared, "We will continue making 2025 another ‘year of execution’ following 2024 by proactively and aggressively advancing portfolio optimization. Our focus will be on strengthening our execution capabilities while materializing differentiated competitiveness."
#LGChem #ShinHakCheol #PetrochemicalIndustry #BusinessTransformation #EthyleneMarket #HighValueMaterials #ChemicalIndustry #PortfolioOptimization #KoreanBusiness #GlobalTrade
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- Nongshim Reconsiders ‘U.S. Third Plant’ as Shin Dong-won Weighs Response to ‘Trump Tariffs’
- Shin Dong-won, chairman of Nongshim, is facing growing concerns over the "Trump tariff risk."
Last year, Chairman Shin was considering building a third factory in the United States to meet the increasing demand for ramen in the local market. However, he shifted his strategy to constructing an export-only factory in Busan. This change came as former U.S. President Donald Trump announced plans to impose tariff barriers on countries worldwide, making the need for expanding manufacturing facilities in the U.S. more pressing.
According to the food industry on April 4, there are speculations that Nongshim may reconsider building a new plant in the U.S. to mitigate the risks of tariffs imposed by the U.S. government.
To address the tariff-related risks, which are a top priority of Trump's second-term policies, having additional factories in the U.S. could be a more effective solution. The Trump administration has already signaled a global tariff war. On April 1, Trump signed an executive order imposing tariffs of 25% on Canada and Mexico and 10% on China, which took effect on April 4.
Although he abruptly delayed the tariffs on Canada and Mexico for a month just before implementation, many analysts believe that the risk remains, given Trump's negotiating style.
Considering Trump’s strong "deal-maker" approach, experts point out that he could use tariffs as a leverage tool whenever he believes the U.S. is not benefiting enough.
South Korea is not exempt from this risk. Since Trump's campaign days, when he pledged to apply a universal minimum tariff of 10% on all countries, South Korea’s major export companies have been closely monitoring the potential impact of his administration.
The repercussions are already being felt. On April 3, the stock prices of major domestic food companies declined across the board as concerns grew that the U.S. government could impose successive tariff barriers on various countries, potentially impacting South Korean food exporters.
For Chairman Shin, the tariff risk is an unavoidable burden. Nongshim currently operates two factories in the U.S., but the production capacity of these plants alone is insufficient to meet local consumer demand.
A Nongshim official stated, "If we build another plant in the U.S., we expect that local sales will increase in line with the expanded production capacity. The first and second plants are already running at full capacity, and a new factory would allow us to better meet demand."
Chairman Shin had hinted at this need during Nongshim’s annual general shareholders’ meeting in March 2023, saying, "We are considering constructing a third plant in the U.S., with the East Coast being a strong candidate."
However, his final decision was to expand in South Korea rather than in the U.S. In June of last year, Nongshim put its U.S. third-plant plan on hold and instead opted to build an export-dedicated factory at the Noksan plant in Busan to meet the rising overseas demand.
Nongshim explained that, after evaluating the business feasibility of an additional U.S. factory, the costs of acquiring land, purchasing equipment, and labor were too high, making it an unfavorable time for investment.
Nongshim is currently investing KRW 191.8 billion (US$ 138.3 million) in the construction of the Busan export-only factory. Groundbreaking is expected to begin soon, with the goal of completing the investment by the end of April 2026 and starting operations in the second half of next year.
This marks the first time in 17 years that Nongshim has built a ramen factory in South Korea. Once completed, the company’s annual production of export ramen will double from the current 500 million units to 1 billion units.
However, with Trump's second administration now a reality, some argue that it is time for Nongshim to reassess its strategy. If the tariff risk materializes, building a new factory in the U.S. could be a long-term advantage for the company. A year ago, Trump's re-election was uncertain, but now that his second term is underway, a reassessment of the situation is necessary.
Nongshim’s overseas sales ratio was around 34% in 2020, but it increased to 37% in 2021, 39% in 2022, and remained at 39% in 2023. An estimated 40% of the company's total operating profit also comes from overseas markets.
Sales in the U.S. are growing rapidly. Last year, the Financial Times, citing market research firm Euromonitor International, reported that Nongshim’s largest overseas market is the United States, where the company holds a 25.4% market share. Nongshim ranks second in the U.S. market, following Japan’s Toyo Suisan, which dominates with about 50% market share.
In July 2023, Chairman Shin sent an email to employees expressing his ambition to expand in the U.S. market, stating, "By 2023, we aim to triple our annual revenue in the U.S. and become the number one ramen brand."
Chairman Shin’s decision to continue the leadership of CEO Lee Byung-hak, a production expert, is also seen as reflecting concerns about securing production bases.
CEO Lee is widely recognized as an expert in production management within and outside of Nongshim. Since joining the company in 1985 as part of the quality development team, he has held key positions such as production manager at the Anyang and Gumi plants, production technology team leader at Anyang, and factory manager at both Gumi and Anyang. Before becoming CEO, he served as the head of production.
Given that CEO Lee has overseen Nongshim’s largest production facilities—the Gumi and Anyang plants—and eventually took charge of production for all Nongshim factories, his expertise is unquestionable.
CEO Lee played a key role in implementing a smart factory system at the Gumi plant, making Nongshim the first ramen company in South Korea to do so. He was responsible for enabling the factory to produce 600 packs of ramen per minute.
Considering that Nongshim must carefully deliberate its production base strategy, it is likely that Chairman Shin will continue to rely on CEO Lee’s expertise for the time being. In fact, Lee retained his position in last year’s executive reshuffle, suggesting that he may have his term extended at the upcoming general shareholders' meeting in March.
A Nongshim official stated, "The plan to build a new factory in the U.S. is currently on hold," adding, "It is difficult to confirm whether the management is reassessing the construction of a U.S. plant in response to the tariff risk."
#ShinDongWon #Nongshim #TrumpTariffs #USFactory #RamenMarket #FoodIndustry #GlobalExpansion #ExportStrategy #ProductionManagement #KoreanBusiness