[Asia Economy Reporter Hyungsoo Park] The stock price of Seongchang Enterprise Holdings is on the rise. It appears that the increase in lumber prices due to Russia's invasion of Ukraine is having an impact. Russian lumber accounts for one-fifth of the imported volume in the domestic market. As raw material prices, including international oil prices, continue to rise, Seongchang Enterprise Holdings, which has risen less among raw material-related stocks, is attracting attention. International oil prices surpassed $130 per barrel during the session, marking the highest level since July 2008. Some predict that oil prices could rise to $200.
As of 11:13 AM on the 7th, Seongchang Enterprise Holdings is trading at 2,575 KRW, up 6.63% from the previous trading day.
According to the Korea Forest Service's import-export statistics for forest products, imports of Russian sawn timber increased by 41.9% year-on-year to 444,000㎥ last year. This volume accounts for 21.3% of total imports (approximately 2.12 million ㎥), making it the second largest share after Chilean imports (478,000㎥). For particleboard (PB), a major raw material for furniture, dependence on Russia is the second highest after Thailand. The domestic PB market has a high dependence on imports, with an import share of 84.8%.
According to the Korea Lumber Association, the price of Russian sawn timber (specifications: 3.6m × 3.0cm × 3.0cm) rose 46% from 390,000 KRW in December 2020 to 570,000 KRW over the past year. Even if the Ukraine crisis ends early, price pressure remains high due to factors such as increased new housing construction in the U.S. and the resumption of production facilities in China.
Seongchang Enterprise Holdings was founded in 1916 and reorganized into a holding company structure in December 2008. It provides management consulting and advisory services to its affiliates Seongchang Enterprise and Seongchang Board, while also engaging in new business development and afforestation projects. Since the 1960s, it has been conducting forest management projects such as afforestation on more than 200 hectares annually to promote sustainable forest development and forest environment creation. It carries out afforestation projects on 50 hectares annually and owns and manages 8,140 hectares of forest land nationwide.
Seongchang Board recycles over 250,000 tons of waste wood annually to produce high-quality eco-friendly particleboard. It prevents the cutting of more than 200,000 pine trees each year. Particleboard is a widely used recycled material in kitchen furniture, office furniture, general furniture, and home appliances.
As of the end of the third quarter last year, production volumes were 77,425㎥ of ordinary plywood, 8,127㎥ of TEGO plywood, 19,287 tons of Formarin, 226,465㎥ of particleboard, and 101,531 tons of wood chips. The average operating rate was 84.33%. The products are distributed domestically through direct sales and dealerships. As of the end of the third quarter, it held the number one market share in the domestic market.
Seongchang Enterprise Holdings recorded sales of 198 billion KRW and operating profit of 10.5 billion KRW last year. Sales increased by 15.9% and operating profit rose by 30.4% compared to the previous year.
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