Ha Man-gyu, CEO of Hanguk Jugang: "Monetizing 15 Billion Won in Hidden Assets to Launch New Businesses and M&A"

[Financial News]  "We do not place significance on the one-off gain from selling the plant itself. What matters is using the funds secured effectively and turning them into sustained growth and profits."
Ha Man-gyu, CEO of Hanguk Jugang, plans to invest the 15 billion won secured from selling the Gunbuk plant in Haman, Gyeongsangnam-do, in securing new growth drivers. Founded in 1987, Hanguk Jugang has focused on large cast-steel products. Now, as its core business enters an upswing, the company is moving to expand its business portfolio. New businesses and mergers and acquisitions (M&A) are both under consideration.
Speaking with Financial News on the 18th, Ha said, "We have secured funding for new investments just as our core business is entering an upcycle. This is a good time to prepare for the next stage. This sale is the starting point."
On the 15th, Hanguk Jugang announced that it would sell the Gunbuk plant to its largest shareholder, Hanguk Jegang, for 15 billion won. The gain on the sale is expected to be approximately 11.8 billion won, equivalent to about 40% of the company's market capitalization. Most of the site was acquired in 1988, and its book value has remained virtually unchanged since an asset revaluation in 1999. The transaction will therefore monetize asset value that had been tied up for an extended period.
The finishing process handled by the Gunbuk plant will be reorganized around the Beopsu plant, where the headquarters is located. Ha explained, "This is intended to reduce the logistical and management inefficiencies that arose because the processes were split between two locations. Since production is not being reduced, the impact on sales and production capacity will be limited."
■Core Business Also Enters an Upswing... Order Backlog Up 30%The backdrop to the new-business investment is the recovery of the core business. Hanguk Jugang's cast-steel order backlog increased from 6,441 tons at the end of last year to 8,400 tons in the second quarter of this year, a 30.4% rise.
Cast steel is a lagging industry in which a time gap occurs between orders received by shipbuilders and others and the placement of actual purchase orders. The company believes the recent boom in shipbuilding has begun to translate into orders for cast-steel products.
Ha said, "Volumes are rising simultaneously in both shipbuilding and power generation. We will also grow our core business with a focus on high-value-added products."
Hanguk Jugang is pursuing certification under NORSOK standards to enter the offshore plant and offshore wind markets. In May, it completed production of its first gas-turbine units and continues to supply products to the defense sector.
■Reinvesting 15 Billion Won... "M&A Also Under Consideration"The industry's main interest is how the 15 billion won will be used. Ha said the company is reviewing new businesses, focusing on areas that could create synergies with its existing cast-steel operations.
He said, "If we can leverage the large-scale materials equipment and process capabilities accumulated over decades, it becomes much easier to overcome the barriers to entering new markets. We are reviewing various possibilities and preparing to present a concrete plan within this year."
M&A is also on the table. Acquiring a proven company can shorten the time needed to enter a market compared with building a new business from scratch.
Ha explained, "We are considering both building a business ourselves and acquiring companies that are already established. M&A offers an advantage in terms of speed." However, he added, "We will not rush. We will focus on targets that offer both a reasonable price and growth potential."
Regarding the gain from the sale, he emphasized, "The 11.8 billion won is merely a one-off gain. What matters is creating a structure that continuously generates profits by using these funds."
He added, "We will raise our business portfolio and corporate value together by strengthening the competitiveness of our core business while securing new growth pillars."

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