SG has been strong for two consecutive days. With former President Donald Trump returning to the White House after four years, expectations for the end of the Russia-Ukraine war are growing. It is understood that SG aims to generate at least trillion-won-level sales of Eco Steel Ascon in Ukraine in the mid to long term. Considering that last year's sales were in the 80 billion won range, it shows that there is great anticipation for reconstruction projects after the end of the Ukraine war.
As of 11:03 AM on the 7th, SG is trading at 3,525 won, up 12.26% from the previous day. It also closed the previous day up 29.22%. The market capitalization has risen to 3,300 billion won.
SK Securities analyzed that with former President Trump's election, the possibility of an early end to the Ukraine war has increased, and performance improvement is expected through participation in Ukraine reconstruction projects. They did not provide an investment opinion or target price.
Heo Seon-jae, a researcher at SK Securities, explained, "SG is the No. 1 domestic Ascon company, and meaningful profit generation is possible through participation in Ukraine reconstruction projects," adding, "They have already secured orders worth a total of 35 billion won from two local Ascon producers in Ukraine last year and this January." He also added, "In July, they announced a joint plan with POSCO International to promote road restoration projects."
Ascon hardens below a certain temperature and lacks product differentiation, it is known to be difficult to enter overseas markets and mainly focuses on domestic business. In preparation, SG filed a patent for ‘Eco Steel Ascon’ in Ukraine in May last year. Eco Steel Ascon is an eco-friendly, low-cost, and high-strength product made by recycling slag, a steel byproduct, effectively solving Ukraine’s slag disposal problem, as Ukraine is a steel powerhouse.
Researcher Heo said, "After conducting road demonstration paving tests in the fourth quarter of this year, large-scale orders and revenue recognition are expected to begin in the first quarter of next year," and analyzed, "The Ukraine reconstruction project is only part of the company's overseas expansion plan." He also explained, "The essence of growth is penetrating new markets such as Ukraine, India, and Indonesia through Eco Steel Ascon," adding, "Since Ascon-related regulations were eased for the first time in four years starting February this year, domestic performance is also expected to recover."
Meanwhile, during the election period, Trump repeatedly claimed that "if he had been president, the Ukraine war would not have started." Samjong KPMG forecasted that as Trump continues to mention the end of the Russia-Ukraine war, if Ukraine reconstruction projects accelerate, it will be a factor expanding overseas business opportunities for Korean construction companies.
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