[Click eStock] "SG Ready for Overseas Expansion... Expecting Sales Growth and Profit Turnaround This Year"

Yuanta Securities forecasted on the 26th that SG, a specialized manufacturer of asphalt concrete, is expected to achieve sales growth and turn profitable this year.

Myungjun Kwon, a researcher at Yuanta Securities, stated, “SG's maximum annual sales amount to approximately 400 billion KRW, and growth is particularly anticipated through the Eco Steel Asphalt Concrete developed in 2022,” adding, “Since last year, an exception clause was introduced for the asphalt concrete business, which was designated as a unique industry for small and medium enterprises, thereby resolving the reverse discrimination against mid-sized companies like SG.”

SG developed Eco Steel Asphalt Concrete using steelmaking slag instead of the natural aggregate used in conventional asphalt concrete and completed registration as a procurement item with the Public Procurement Service in 2023. Eco Steel Asphalt Concrete offers ▲ more than twice the road lifespan due to higher strength compared to conventional asphalt concrete ▲ reduced construction stages saving time and costs ▲ noise and fine dust reduction effects.

Researcher Kwon said, “SG is the only company in Korea possessing Eco Steel Asphalt Concrete technology, and since the product development in 2022, it has invested its own funds to secure references such as the bus-only lanes from Sinchon to Ewha Womans University Station and Seoul Sejong-daero,” adding, “If Eco Steel Asphalt Concrete exhibits characteristics similar to road surface color guide lines, growth speed is expected to improve from this third year.”

Since Eco Steel Asphalt Concrete is still in its early stages, SG is attempting market entry by pricing it similarly to general asphalt concrete. Additionally, to meet demand in regions where it cannot cover, SG has prepared a cooperation plan involving technology transfer to asphalt concrete companies in other regions in exchange for royalties.

Researcher Kwon explained, “Although the war in Ukraine has not yet ended, preparations for entry such as obtaining local patents and signing a memorandum of understanding (MOU) for consignment production have been made,” and “They plan to penetrate the market early after the war ends, adopting entry methods such as joint ventures (JV) or acquiring local factories.”

In India, a patent has been filed and a preliminary feasibility study is underway. Entry into Indonesia is currently at the market research stage and is expected to proceed after Ukraine and India.

To respond to the mandatory eco-friendly installation in the asphalt concrete industry, SG developed SGR+, a facility that reduces specific atmospheric harmful substances. Since asphalt concrete companies typically conduct maintenance work during the off-season in winter, sales from this are expected to occur in the first quarter, which is the lowest performing quarter.

Researcher Kwon forecasted, “We expect sales growth and a turnaround to operating profit in 2025,” adding, “Expansion of public construction orders and growth of domestic Eco Steel Asphalt Concrete will contribute to profitability improvement.”

He emphasized, “Expansion of SGR+ orders can reduce quarterly performance volatility during the off-season in the first quarter, and profitability will improve through overseas expansion such as in India, where business is expected to become visible within the year.”

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