Venturing Investment Overseas
Despite the economic recession, foreign investments of KOSDAQ-listed companies are showing good returns. As these are new facility investments since securing demand, increased profits for some listed companies that show strong performance are expected. Stock prices are now being adjusted after hitting a peak in the first half of this year, but some of the listed companies are showing a trend of up to 80% increase.
According to Korea Exchange and the financial investment industry on October 21, the amount of new facility investments of KOSDAQ-listed companies since July this year is 211 billion won (US$198 million). There are 11 listed companies that have started investing since July, which is 30% less than the number from the same period last year. During the first half of this year, there were 49 KOSDAQ companies with new investments, with a total investment amount of 868.3 billion won (US$817 million). That is 227% more than the number from the same period last year.
Semiconductor materials company Soulbrain, for instance, joined China’s Ba Yi Group and invested 10.7 billion won (US$10.1 million) to build an etchant production facility in Xi’an, China by next year.
Soulbrain expects 169.6 billion won in Q3 sales (US$159.6 million, 8.8% compared to last year), 31.4 billion won in business profits (US$29.5 million, 2.7%), and 25.8 billion won in net profit (US$24.3 million, 14.6%). For Q4, it expects a business profit of 29.9 billion won (US$28.1 million), which is 19% higher than last year.
Camera module production company MCNEX also invested 30 billion won (US$28.2 million) into building a factory in Vietnam by the end of this year to start producing in Q4. MCNEX expects 33% of this year’s sales to come from Samsung Electronics, 29% from a local Chinese business, and 18% from Hyundai MOBIS automobiles.
Researcher Ko Bong-jong from Daishin Securities said, “MCNEX is under-estimated as of now, but will have high growth through its Vietnamese operations,” and added, “Estimated sales for this year are 289.2 billion won [US$272.1 million, 70%], 12.6 billion won in business profits [US$11.8 million, 119%].”
Optical lens company Kolen will also build a camera lens assembly facility in the Philippines early next year. Kolen will invest a total of 2.1 billion won (US$1.9 million) into its Filipino affiliate GB Plan, where it has 100% shares. A Kolen associate said, “When the facility construction is complete by next May, we can increase production to 10 million per month.”
Nano-fiber production company FT EnE will complete its Canadian facility construction and start operations by early next month. It supplies commercial air filters (gas turbine filters, air cleaning filters, etc.) to North American customers such as General Electric (GE). A FT EnE associate said, “The company has signed a large contract [2.3 billion won, US$2.1 million] with GE and are discussing additional contracts.” FT EnE’s estimated sales for this year are 50 billion won (US$47 million), 65% of which will be from nano-fiber. Korea Development Bank recently became a secondary stockholder (5.9% share) after requesting an equity conversion of 5 billion won (US$4.7 million) in convertible bonds.
Standard plate production company Sinjin SM has been operating its Thailand facility which it completed in April. The company plans on increasing the facility’s current operation rate to over 80% to make more profits. The maximum production capability of its Thailand facility is 15 billion won (US$14.1 million) in sales. Sinjin SM CEO Kim Hong-ki said, “The Thailand facility has entered its stabilizing phase, and will begin to increase production to show quick sales growth in the second half of this year.”
Natural substance functional base material production company Bioland invested 2.2 billion won (US$2.0 million) into building a production facility for synthetic raw materials for cosmetics in China. The construction will be complete by the end of this year, and its commercial production will begin on the second half of next year. The company estimates 50 billion won (US$47 million) in sales from the Chinese facility.
Automobile parts company Kopla invested 16 billion won (US$15 million) to build a production facility in Georgia in the US. The construction began earlier this month, and will be completed by September next year. It will begin operation in January 2015. Kopla supplies high performance polymer, a car weight lightening material, to the US facility of Hyundai-Kia Motors.