[Biz Leader] SNsys "Develops Korea's First LNG Carrier Control System... Riding the Shipbuilding Supercycle"

Internalization of Core Ship Operation Systems
Targeting the World's Largest Market in China After KOSDAQ Listing

JaeHyuk Bae, CEO of SNSys.

"SNsys possesses powerful technological capabilities, including the commercialization of Korea's first integrated control system for liquefied natural gas (LNG) carriers. Based on this, we will focus on expanding new business areas after our listing," said Bae Jae-hyuk, CEO of SNsys, in a recent interview with Asia Economy, outlining his ambitions following the company's KOSDAQ listing.

Established in 2017 as a spin-off from Samsung Heavy Industries' electrical and electronics division, SNsys is the only company in Korea that independently develops and manufactures essential systems for ship operation, including power, navigation control, ballast water treatment, and dual-fuel supply systems. Leveraging global certifications and engineering expertise, the company has earned the trust of global shipbuilders and shipowners, securing top-level references in Korea.

Bae stated, "We were the first in Korea to develop LNG gas control systems, which require advanced technology, and we have proven our capabilities by successfully localizing integrated machinery systems for naval vessels. As a result, we hold the highest number of global certifications (33) and patents (123) among ship equipment manufacturers."

SNsys's business divisions include Power Solutions, Eco Solutions, Navigation Control Solutions, and Maintenance, Repair, and Operations (MRO) Solutions. Notably, the Eco Solutions division's Ballast Water Management System (BWMS) proactively obtained International Maritime Organization (IMO) certification and has achieved strong results in the global retrofit market.

Bae explained, "With the mandatory installation of BWMS, the retrofit market began to grow in earnest from 2018, but as the mandatory installation period ended, there was a slight decrease in performance. Previously, our revenue structure was focused on large vessels, but we plan to expand supply to the small- and medium-sized vessel market with the launch of next-generation BWMS." He added, "We expect to recover to the sales level seen during the retrofit market boom, which was over 50 billion KRW."

SNsys has demonstrated stable growth in performance. In particular, its operating profit margin was 14.5% in 2022, 12.0% in 2023, and 11.2% last year, which is higher than the industry average of 3.8% to 7.5%. The return on equity (ROE) was also excellent at 24.9% last year.

He emphasized, "By operating a fully integrated value chain from product development to production and service, we have maximized cost competitiveness and quality management efficiency. Establishing a full-cycle MRO service system for ships has been a key factor in building a stable revenue structure."

Recently, the shipbuilding industry has entered a structural growth cycle due to stricter eco-friendly regulations from the IMO and the European Union (EU), as well as the accelerating replacement cycle for aging vessels. In particular, the newbuild and retrofit markets for eco-friendly fuel-powered ships are expected to continue to thrive. In response, SNsys is preparing to enter China, the world's largest shipbuilding market. The company already established a Chinese subsidiary in December last year and plans to secure a production base there.

Bae said, "In China, we plan to expand our market share in the small- and medium-sized vessel segment through next-generation ballast water treatment systems, and enhance our competitiveness in power and navigation control solutions by localizing production to increase orders. Additionally, in response to the anticipated surge in global demand due to recent environmental regulations, we are preparing to enter the eco-friendly fuel retrofit market. We have established product lineups for LNG and methanol fuels, and plan to build a full lineup for next-generation fuels such as LPG, ammonia, and hydrogen to respond to market changes."

After listing, SNsys plans to focus on expanding new businesses such as entering the onshore and offshore plant markets with Power Solutions, expanding the newbuild and retrofit markets for dual-fuel systems in response to environmental regulations, and next-generation ballast water treatment systems. The funds raised from the public offering will be used for establishing production bases to expand manufacturing facilities, investing in smart manufacturing equipment, research and development (R&D) for new products, and expanding global market bases.

Meanwhile, SNsys will offer 1.9 million shares through this listing. The public offering price band is set at 27,000 to 30,000 KRW, with the total offering amount ranging from 51.3 billion to 57 billion KRW. The demand forecasting will take place from July 28 to August 1, and the general subscription will be held over two days, August 7 and 8. Shinhan Investment Corp. is acting as the lead underwriter for the listing.