1. What Happened? Keyang Electric’s H1 2025 Earnings Release

Keyang Electric announced its H1 2025 results on August 14, 2025, reporting sales of KRW 102.1 billion (an 8.7% increase QoQ), an operating loss of KRW 8.5 billion, and a net loss of KRW 8.5 billion. While sales outperformed expectations, profitability deteriorated.

2. Why Did This Happen? Analyzing the Performance Drivers

2.1 Business Segment Analysis

  • Industrial Products: Sales declined by 10.6% due to a slowdown in the downstream industry and increased competition.
  • Automotive Components: Sales grew by 4.8% driven by automotive industry demand, but high cost pressures led to operating losses.

2.2 Financial Analysis

  • Increased Short-term Debt: Increased borrowing for operating funds added to financial burden.
  • Decreased R&D Spending: Reduced investment in future growth raises concerns about long-term competitiveness.

3. What’s Next? Outlook and Investment Strategy

3.1 Positive Factors

  • Growth in Automotive Components: The robust growth in the automotive components business and large-scale order wins are positive.

3.2 Negative Factors

  • Persistent Profitability Decline: Cost control and profitability improvement are urgent.
  • Deteriorating Financial Health: Management of increasing debt is necessary.
  • Macroeconomic Uncertainty: High interest rates and exchange rate volatility are burdensome factors.

4. What Should Investors Do? Action Plan

The current investment recommendation is ‘Neutral.’ Improvements in the business environment are needed, including profitability improvements, financial restructuring, strengthened R&D investment, and measures to address exchange rate and interest rate volatility. Investors should closely monitor the company’s future strategies and performance changes.