1. Kumkang Industrial Co., Ltd.’s H1 2025 Performance: What Happened?

Kumkang Industrial Co., Ltd. recorded sales of KRW 409.692 billion (a 2.7% increase YoY) in H1 2025. However, operating profit plummeted to KRW 11.101 billion (a 50.3% decrease YoY), and net income swung to a loss of KRW 0.916 billion. Despite robust growth in the scaffolding division (102.1% increase) and steady growth in the forging division (14.8% increase), weaknesses in the panel and feed divisions dragged down overall performance.

2. Unpacking the Decline: Why Did This Happen?

  • Construction Industry Slump: The poor performance of the panel division reflects the ongoing downturn in the construction market.
  • Raw Material Price Volatility: Fluctuations in raw material prices, such as COIL and zinc, have put significant upward pressure on manufacturing costs.
  • Increased Competition in the Panel Segment: Kumkang is facing intensifying competition in the panel market, leading to a decline in market share.
  • High Debt-to-Equity Ratio: The company’s high debt-to-equity ratio of 118.72% poses a considerable risk in a rising interest rate environment.

3. Outlook and Investment Strategies: What’s Next?

A short-term turnaround for Kumkang seems challenging. However, positive factors like growth in the scaffolding division and the government’s OSC industry activation policy offer some hope. Investors should consider the following:

  • Potential for a Turnaround: Monitor the company’s efforts to improve competitiveness in the panel division, increase sales in the feed division, and implement cost-cutting measures.
  • Macroeconomic Indicators: Carefully analyze the impact of external factors such as exchange rates, interest rates, and raw material prices.
  • Management Strategy: Assess the effectiveness of management’s strategy to overcome current challenges and secure future growth drivers.

4. Action Plan for Investors

We currently maintain a ‘cautious’ investment outlook on Kumkang Industrial Co., Ltd. Investors should carefully consider the factors discussed above before making any investment decisions.