Wonik Cube, Turns Profitable Last Year Due to Increased Product Demand... Bright Outlook for First Half of This Year

The election to choose the next president is just one year away. Speculative funds betting on leading presidential candidates are rapidly increasing in the domestic stock market. Theme stocks related to top-ranking figures in the '2022 presidential candidate approval ratings,' such as Lee Nak-yeon, a member of the Democratic Party of Korea, Lee Jae-myung, Governor of Gyeonggi Province, and Yoon Seok-youl, former Prosecutor General, are thriving. As former Prosecutor General Yoon's approval ratings rise sharply, the stock price volatility of listed companies managed by Yoon and his university alumni executives has also increased. Asia Economy aims to examine the business performance and financial stability of political theme stocks.

[Asia Economy Reporter Yoo Hyun-seok] Wonik Cube plans to appoint lawyer Kim Young-dae as auditor at the shareholders' meeting scheduled for the 30th. The news that Kim is a senior by one year to former Prosecutor General Yoon brought attention to Wonik Cube as a theme stock.

Wonik Cube is an affiliate of the Wonik Group. Wonik Materials is the largest shareholder, holding 31.57% of the shares. It was established on June 12, 1979. The company is engaged in the manufacturing, distribution, and import-export of various chemical products and building materials. Since 2005, it has been selling some construction silicone. Based on last year's performance, the sales proportion was highest in polymers (36.43%). Polymer products mainly refer to raw materials used in plastic processing industries. This is followed by chemicals (30.91%) and building materials (26.17%).

Wonik Cube succeeded in returning to profitability last year. On a consolidated basis, sales in 2020 were 195.4 billion KRW, a 4.1% decrease from the previous year. However, operating profit recorded 3.4 billion KRW, marking a return to profit. The company had posted losses in 2018 and 2019. A company official explained, "At the beginning of last year, both demand and supply shrank due to COVID-19, but later, as several suppliers shut down, supply could not keep up with demand. This led to higher unit prices, and subsequently, oil prices stabilized, improving the spread."

Although operating profit turned positive, sales have been declining. Consolidated sales decreased from 221.1 billion KRW in 2018 to 203.9 billion KRW in 2019. Sales have fallen for three consecutive years through last year. A company official said, "This was due to the sale of the subsidiary Won Tank Terminal and demand contraction in the chemical sector caused by COVID-19 last year."

Specifically, except for chemicals and new businesses, most sectors grew. Chemicals decreased from 72.9 billion KRW in 2020 to 60.5 billion KRW, and new businesses dropped from 7.3 billion KRW to 2.4 billion KRW. In contrast, building materials increased from 46.9 billion KRW to 51.1 billion KRW, and polymers rose from 63.6 billion KRW to 72.0 billion KRW.

Wonik Cube explained in its business report, "The chemical division was affected by the overall economic downturn in the chemical industry, decreased demand, and price drops due to COVID-19. Building materials saw price increases in major items following a global surge in wood demand after wood supply reductions began in the second quarter of last year. Polymers were influenced by diversification of supply sources and successful launches of new products."

The new business sector is facing difficulties. Wonik Cube supplies machinery and materials such as laminators used in the lamination process of printed circuit boards (PCB), copper foil used as a conductive material in various electronic components, solar module parts, and aluminum foil. A company official said, "The PCB sector has declined as many companies relocated to Vietnam and other countries," adding, "The outlook for this year is not positive either."

Despite some business setbacks, Wonik Cube expects the performance improvement trend to continue through the first half of this year. The supply shortage experienced last year is expected to persist until the first half. The official said, "Price increases are continuing, and oil prices are rising, so we expect to maintain profitability through the first half. The overall situation in the second half will need to be assessed."

This content was produced with the assistance of AI translation services.