[Click eStock] "SG, Full Turnaround Possible This Year"

NH Investment & Securities forecasted on the 21st that SG will be capable of a full-scale turnaround starting this year.

Baek Joon-gi, a researcher at NH Investment & Securities, explained in a report on the same day, “Since 2020, SG has not achieved consolidated sales exceeding 100 billion KRW, and the last time it reached an operating profit of 10 billion KRW was in 2019. The reason is that due to the Small and Medium Enterprise Suitable Industry regulation, SG, a mid-sized company, was unable to participate in public asphalt concrete (Ascon) construction bids for five years.”

He analyzed, “This year, the regulation was partially lifted (allowing 20% of construction orders in the metropolitan area and Chungnam), and SG announced a large-scale order (approximately 200 billion KRW) from consolidated and equity-method subsidiaries on the 6th. It is expected that 50% will be recognized this year and the remaining 50% next year.”

He also emphasized the need to pay attention to Eco Steel Ascon beyond short-term performance. Eco Steel Ascon is made by using slag, a steel byproduct, instead of the traditional aggregate used in Ascon, and SG is the only company in Korea to have completed its development. It is said to have 1.5 to 2 times higher strength compared to regular Ascon and is attractive from a resource recycling perspective.

He stated, “The Eco Steel Ascon technology is protected by patents, and construction references are currently being secured through pilot projects such as the Anseong Expressway and Hongdae Front,” adding, “Since there is significant difficulty in securing first-grade aggregate supply in the Ascon market, the visibility of market share expansion for Eco Steel Ascon is expected to be very high.”

Furthermore, he noted, “In addition to the momentum from regulation lifting and new product expansion, benefits are also expected from the newly established Ukrainian subsidiary related to large-scale SOC investments following the end of the Russia-Ukraine war,” and projected, “This year’s sales are expected to reach 151.6 billion KRW, the highest in the past five years, and operating profit is also expected to achieve 13.2 billion KRW, the highest in the past five years.”