Sammok S-Form Expects Increased Demand for 'Geopujip' Due to Expansion of Construction Volume

[Asia Economy Reporter Hyungsoo Park] The construction materials market is sensitive to the construction and housing industry and is influenced by the business scale of major clients such as construction companies. The formwork market is no different. Sammok S-Form, the leading company in the domestic formwork market, is highly likely to continue its performance improvement trend this year following last year. Expectations are growing that formwork demand will sharply increase as the government promises large-scale housing supply to stabilize housing prices.

Sammok S-Form produces aluminum forms, which are formworks for building interior walls, and gang forms (panel forms), which are for building exterior walls, and rents them to construction companies. It holds 40% of the domestic formwork market. Aluminum forms are a type of panel form, which refers to concrete formwork. Since concrete is in a liquid state before hardening, a mold is needed to shape it. The panel is used at this stage. After shaping the building form with the panel, cement is poured to complete the building structure.

Until the late 1990s, steel formworks were mainly used in the domestic construction market, but in the 2000s, environmentally friendly and precise construction-capable aluminum forms became the primary choice. Producing aluminum forms requires initial capital and technical expertise, so a few companies such as Sammok S-Form and Geumgang Industry hold high market shares.

Aluminum forms are lightweight and enable fast construction. They generate less construction waste and are recyclable. Existing steel formworks had to be discarded after 10 to 15 uses, but aluminum forms can be used more than 150 times. After use, they can be reprocessed and reused almost 100%. Due to their modular nature, construction costs are about 50% cheaper, and the number of construction personnel can be reduced by about 13%.

Sammok S-Form maintains its market position based on technological competitiveness such as aluminum form coating methods and coating equipment technology. It holds technologies related to aluminum form coating methods and coating equipment. The technology forms a uniform coating layer on aluminum forms by linking the brush and air cleaning process that cleans the aluminum form with the process of applying heat to dry the paint after spraying. It developed coating equipment that can apply automated processes from coating to drying. This is technical know-how accumulated over nearly 40 years since 1985 in the form business.

Thanks to continuous facility investments since its establishment, it has secured a large quantity of aluminum formwork systems. It has established an integrated production system capable of performing aluminum material melting processes.

Sammok S-Form experienced poor performance for three years from 2018 to 2020. Sales shrank from 254 billion KRW in 2017 to 116.5 billion KRW in 2020. Decreased construction orders due to reduced new housing supply and price competition caused by new small-scale market entrants led to the poor performance.

Last year, Sammok S-Form recorded sales of 204.9 billion KRW and operating profit of 10.6 billion KRW on an individual basis. Sales increased by 80.3% year-on-year, and operating profit turned positive. Net profit rose sharply to 30.3 billion KRW compared to the previous year. The cost of sales ratio dropped from 91.4% in 2020 to 81.5% last year. The unit price per ton of aluminum form hit bottom in 2020 and has been rising since last year.

With a significant increase in sales last year, it is evaluated that the profitability has entered a normalization phase. Researcher Kim Seryeon of Ebest Investment & Securities explained, "Supported by the sharp recovery in the construction market recently, panel prices are rising and existing bad inventory is being depleted." He added, "Recently, Sammok S-Form has been increasing its net inventory of aluminum forms, and due to the increased inventory, the inventory turnover ratio is expected to bottom out and rise again this year."

There is also an analysis that the prolonged Russia-Ukraine conflict, which has caused aluminum price increases, is both a crisis and an opportunity. Due to economic sanctions on Russia, the world's second-largest aluminum producer, aluminum supply is unstable. As aluminum demand increases and supply remains insufficient, the influence of top-tier companies with large inventories may grow. An industry insider predicted, "The rise in aluminum form prices is likely to improve profitability."