Trump Warns: "Tariffs for Not Manufacturing in the U.S."
Kenkoa Makes Preemptive Investments to Expand U.S. Production
Order Backlog Eight Times Annual Revenue Amid Surging Demand
As U.S. President Donald Trump emphasizes domestic production, the importance of Kenkoa Aerospace's local production base in the United States is growing. With expectations for support in the aerospace industry aimed at Mars colonization, the growth of California Metal and Kenkoa USA, which supply special materials to space companies, is anticipated.
According to the financial investment industry and Kenkoa Aerospace on the 24th, Kenkoa USA will begin construction for expansion within this year. The goal is to double the existing production capacity. Following California Metal's completion of relocation in the second quarter of last year to secure double the production capacity, further investment in expansion within the U.S. is continuing.
A Kenkoa Aerospace official stated, "We are in a situation where expansion must be done within this year," adding, "Due to the nature of the aerospace industry, much information cannot be disclosed to maintain confidentiality."
Kenkoa Aerospace is continuing expansion investments based on 130 billion KRW procured from IMM Investment last year. They are expanding local production capacity in the U.S. to prepare for the influx of orders.
Kenkoa Aerospace provides total solutions ranging from aircraft parts manufacturing to maintenance and space launch vehicle parts production. Based on unique technological capabilities that enable everything from airframe design to certification, they have partnerships with global aerospace companies such as Boeing and Airbus, as well as domestic defense companies like KAI and Hanwha Aerospace. They have secured major clients including Boeing, Airbus, Lockheed Martin, NASA, and SpaceX. Their subsidiary Kenkoa USA is the only 'Tier 1' partner in Korea. California Metal supplies aerospace materials to NASA, SpaceX, and others.
According to Daishin Securities, as of the end of 2023, Kenkoa Aerospace's order backlog amounts to approximately 850 billion KRW. They are continuously expanding orders through diversification of clients and aircraft types. Hansong Hyup, a researcher at Daishin Securities, explained, "The Airbus cargo aircraft conversion (PTF Conversion) project has secured stable volume by signing an exclusive contract with ST Engineering, a global aircraft maintenance, repair, and overhaul (MRO) company." He added, "Production line expansion is underway in North America," and "The U.S. space industry is expanding its business through special material and parts production via subsidiaries and strategic investments in U.S. space startups."
With President Trump emphasizing domestic production, the roles of Kenkoa USA and California Metal are expected to become more important. Kenkoa Aerospace's U.S. subsidiary Kenkoa USA produces aircraft engine-related structures and parts through contracts with global top-tier companies and the U.S. Department of Defense. Major clients include Lockheed Martin, Boeing, Pratt & Whitney, and Blue Origin. Due to increasing orders, factory expansion is underway. Key products include engine parts for the F-35 fighter jet and the A-320 passenger aircraft. They are also engaged in the space launch vehicle business, having secured production contracts for the Artemis project and producing related parts.
California Metal is a major base producing high value-added defense and aerospace raw materials. It supplies raw materials such as titanium and nickel special steel to major space companies including NASA, SpaceX, and Blue Origin. In the defense sector, Lockheed Martin and Boeing Defense are key clients.
Yuanta Securities identified that Kenkoa Aerospace's order backlog surged threefold over five years, from 275 billion KRW in 2019 to 870 billion KRW as of August last year. They expect additional orders of 300 to 400 billion KRW in the first half of this year.
Having received investment from private equity firm IMM, large-scale expansion has been underway since last year. Kenkoa USA is also expanding, and with the completion of California Metal's relocation and expansion, production capacity for high value-added defense and aerospace raw materials is expected to be strengthened.
On the 23rd (local time), President Trump emphasized revitalizing the U.S. economy and job creation in a keynote speech broadcast via video at the World Economic Forum held in Davos, Switzerland. President Trump said, "My message to companies around the world is very simple: come to America and make your products here. We will apply lower taxes than any other country on earth."
He continued, "If you do not make products in the U.S., that is your right," but added pressure by saying, "You will have to pay various tariffs."
Some view Kenkoa Aerospace as following the growth formula of HD Hyundai Electric. With the surge in power demand due to AI growth and increasing replacement demand caused by aging power facilities, HD Hyundai Electric, which has local production plants in the U.S., saw a rapid increase in orders. HD Hyundai Electric recorded sales of 3.3223 trillion KRW and operating profit of 669 billion KRW last year, achieving its highest performance since its launch in 2017. Sales increased by 22.9% year-on-year, and operating profit rose by 112.2%. HD Hyundai Electric's stock price has risen about tenfold over two years since 2023.
Kenkoa Aerospace's sales have steadily increased from 54.7 billion KRW in 2021 to 75.9 billion KRW in 2022 and 91.1 billion KRW in 2023. Sharp growth is expected due to expansion. The financial investment industry anticipates that Kenkoa Aerospace will successfully turn a large-scale profit this year. A full-scale revaluation of corporate value is expected. With President Trump declaring "Mars colonization" as his inaugural policy, related investments within the U.S. are expected to increase.
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