Daechang Solution "Turning Profitable Next Year with Green New Deal Products"

Daechang Solution exterior. Photo by Daechang Solution

[Asia Economy Reporter Hyunseok Yoo] Daechang Solution is diversifying its portfolio with Green New Deal products and aims to return to profitability next year.

Kim Daesung, CEO of Daechang Solution, stated at a recent investor relations (IR) meeting held in Yeouido, Seoul, "The Green New Deal policy, which boldly shifts energy demand from traditional fossil fuels to clean resources to reduce greenhouse gases and pollutants, is being strongly implemented," emphasizing this direction.

Daechang Solution is a casting specialist company that manufactures and supplies seismic structural materials, resource mining machine parts, marine and power plant components, and large engine structural materials. The company experienced ups and downs due to the downturn in the shipbuilding industry. To overcome this, it is diversifying its product portfolio into Green New Deal-related items such as nuclear waste storage containers and wind turbine parts.

One of the products Daechang Solution is focusing on is the nuclear waste storage container. This product is used for handling nuclear waste. According to the company, its storage efficiency is more than twice that of existing containers. CEO Kim said, "These containers are needed not only when dismantling nuclear power plants but also during periodic maintenance replacements," adding, "We are promoting application to domestic nuclear power plants and entry into the nuclear export market, with very high operating profit margins."

The wind turbine parts sector is also an area where growth is expected. Wind turbines consist of the main body (nacelle), blades, and tower (or jacket). Large wind turbines require more cast steel materials due to the increased pressure on gears, which is a strength of the company. Kim explained, "Cast steel parts for gears must have durability against vibration and impact, and there are not many manufacturers worldwide capable of producing them," emphasizing, "We have a track record of supplying from 1.5MW to 5MW class turbines, so expectations for expanding supply are high."

The company also expects recovery in the existing ship parts sector. Daechang Solution produces main bearing supports, structural parts that support the engine shaft. These parts require high durability to withstand repeated shocks from the engine throughout the ship's lifespan. Although affected by the downturn in the shipbuilding market, Daechang Solution anticipates an increase in LNG-powered ships due to environmental regulations by the International Maritime Organization (IMO).

Daechang Solution is also paying attention to the growth of its subsidiary, Cryos, which specializes in producing cryogenic tanks, pressure vessels, cryogenic fuel devices, and cryogenic transfer equipment. A visible area is LNG refueling stations. CEO Kim said, "Kogas plans to order LNG refueling stations in areas with high truck traffic, and from 2022, new stations will be built led by private operators," adding, "Cryos, the only company with a track record in land-based refueling stations, will have a great opportunity."

There was particular optimism following President Moon Jae-in's declaration of the 2050 carbon neutrality vision. As hydrogen fuel and other alternatives to fossil fuels like oil become more active, Cryos is expected to benefit in hydrogen refueling stations. Kim explained, "Currently, mainly high-pressure hydrogen refueling stations are being installed, but as demand increases, there will be a need to switch to liquefied hydrogen stations or LNG or ammonia reforming stations," adding, "Cryos can supply storage tanks and insulated piping."

Daechang Solution plans to achieve a complete turnaround in performance next year, building on the restructuring of its core business groups, which had been concentrated in shipbuilding and marine sectors. This year, it recorded cumulative sales of 33.1 billion KRW and an operating loss of 6.6 billion KRW through the third quarter. Sales decreased by 19.16% compared to the same period last year, and operating profit turned negative. CEO Kim said, "Over the past decade, we have restructured our business groups, and next year we are at the stage of completing a new portfolio that is not concentrated in specific fields but based on lifestyle and energy flows," adding, "By securing Green New Deal-compatible items, we will lay the foundation to become a company that attracts attention in the future."