There is a stock with a market capitalization of less than 100 billion won that boasts a dividend yield of 6%.
This stock is Sebo MEC, a ‘semiconductor machinery powerhouse’. According to the Korea Exchange on the 10th, the stock price was 8,430 won. It rose 10.92% from the beginning of the year. Compared to the 34.58% increase in the KOSDAQ index over the same period, it is virtually stagnant. Last year’s settlement dividend was 500 won per share, and the dividend yield based on the current stock price is 5.93%. It is more than twice the regular savings interest rate of commercial banks (2.85% per year). This is quite high for a company with a market capitalization of 88.8 billion won. On the 8th, I visited Sebo MEC, which joined the ‘KRW 1 trillion club (sales)’ for the first time last year.The head office is located at Insan Building, 341 Hyoryeong-ro, Seocho-gu, Seoul. It is a 6-minute walk from Exit 2 of Nambu Terminal Station. The headquarters building is five stories tall and houses the Equipment Division, Plant Division, Construction Support Division, and Management Support Division. I asked Kim Jin-ho, manager of the management support department, whom I met here, to introduce the company. Manager Kim said, “We started as a machinery manufacturing company in 1978, entered the construction equipment market in the 1980s and 1990s, and have 12 construction licenses in addition to the mechanical equipment construction business license. It was listed on the KOSDAQ in December 1996, and its name was changed to Sebo MEC (formerly Sebo Machinery) in March 2003. “Afterwards, we introduced fluoropolymer coated ducts and received FM ( Factory Mutual, an American multi-purpose insurance agency) certification in July 2011, and completed the Pyeongtaek factory (approximately 4,800 pyeong) in June,” he said. He then led the reporter by saying, “Major semiconductor machinery facilities are located in Complex 1 and 2 of the Eumseong factory in North Chungcheong Province,” and “We will show the heart of a company with a complete production system, including square ducts, coding ducts, silencers, and module structures.”
Park Heung-woo, factory manager, “Speed and accuracy are key to semiconductor machinery”
Sebo MEC’s Eumseong factory in North Chungcheong Province arrived after 1 hour and 30 minutes by car. Boasting a land area of 122,535 m2 (37,066 pyeong) and a building of 43,583 m2 (13,183 pyeong), this is the headquarters that achieved KRW 1 trillion in sales last year. Park Heung-woo, factory manager (executive director), said, “Semiconductor machinery equipment relies on speed and accuracy when requested by customers, and we are recognized by companies such as Samsung Electronics and SK Hynix by supplying high-quality products on time.” He added, “The factory has production and quality control personnel. “We are always present and are providing customized responses even to urgent delivery requests,” he said. He also explained, “We are increasing productivity by developing automation equipment for semiconductor piping production, and we are exporting to China and Japan through specialized coating duct technology and expanding our sales to Southeast Asian semiconductor companies such as Malaysia and Singapore.” A factory official praised, “Plant Manager Park, a member of the 553rd Marine Corps, led the development of independent piping automation equipment with many years of production experience and a bulldozer spirit.”The Eumseong factory consists of four factory buildings (duct factory, coated duct factory, module factory, and piping factory) and support facilities (facility warehouse, product warehouse, office building, restaurant, and dormitory). Dozens of workers in each factory building were busy manufacturing semiconductor machinery and moving ducts with forklifts and large trucks. Plant Manager Park said, “We are No. 1 in the country in terms of primary piping market share,” and added, “We will increase our operating profit ratio by strengthening our competitiveness in secondary piping, where high value-added profits are expected.”The primary piping is the main piping that enters at the beginning of clean room construction. He explained, “Fluororesin coated ducts, which have a high technological entry barrier, have a domestic market share of 60%,” and added, “Orders from semiconductor companies are increasing because they are resistant to fire and can be recycled.” We also supply to S Company, a leading Japanese electronics company. Fluoropolymer coated ducts are known to have a special coating on the inside of stainless steel, eliminating the risk of fire when corrosive chemical gases from strong acids or strong alkaline chemicals are emitted during the semiconductor manufacturing process, and are environmentally friendly. It is used in semiconductors, chemical plants, gas production and refining facilities, etc. This technology was transferred from the US company FAB Tech in 2011.
First member of the ‘KRW 1 trillion club’ last year… Operating profit expected to be KRW 35 billion this year
Sebo MEC opened the era of KRW 1 trillion in sales for the first time last year by leveraging its competitiveness in semiconductor machinery and equipment. Operating profit also showed substantial growth, reaching 33.6 billion won. They jumped by 117.79% and 20.43%, respectively, in four years. In the first half of the year, sales recorded 420 billion won and operating profit 16.7 billion won. Although external growth (sales) is expected to decrease this year due to the slowdown in the semiconductor industry, operating profit is targeting over 35 billion won due to factory automation.Last June, the approximately 16,500㎡ (5,000 pyeong) Pyeongtaek factory was completed. Through this, we expect to strengthen competitiveness and reduce costs through supply to Samsung Electronics’ metropolitan area belt (Yongin, Giheung, and Pyeongtaek). As Samsung Electronics has decided to invest 300 trillion won (over 20 years) in the Yongin Semiconductor Industrial Complex, this is an area where it can enjoy mid- to long-term benefits. The company aims to improve profitability by activating the piping automation plant by securing additional land for the Eumseong factory.As of the first half of the year, cash assets amounted to KRW 41 billion, and real estate assets (headquarters building, Eumseong factory, Pyeongtaek factory, Asan factory, etc.) amounted to KRW 70 billion. When combined, it exceeds the market capitalization. Dividends are also increasing to 150 won per share in 2019, 200 won in 2020, 250 won in 2021, and 500 won last year.
CEO Wooyoung Kim “Efforts to maintain high dividends… “We will expand스포츠토토 investment in facilities.”
CEO Kim Woo-young, who had a phone interview that day due to a business trip, said, “We have been paying dividends consistently for 25 years since 1998,” and added, “We will make efforts to maintain high dividends this year as well.” If this year’s operating profit is similar to the previous year or increases slightly, it is highly likely that the 500 won dividend paid to commemorate ‘KRW 1 trillion in sales’ will be paid again. He added, “We are also positively considering repurchasing shares next year to stabilize the stock price.” He added, “We will increase research and development expenses and expand facility investment to strengthen the competitiveness of semiconductor mechanical equipment technology,” and added, “We will also make efforts to find new business types in celebration of our 46th anniversary.”Although it is a professional construction company specializing in semiconductor mechanical equipment, it is making efforts to diversify its plant business. We performed piping work for Samsung Electronics’ Hwaseong plant integrated wastewater treatment plant and piping work for Shinwolseong Nuclear Power Plant Units 1 and 2. Major clients include Samsung Electronics , SK Hynix, Hyundai Engineering & Construction , and SGC E-Tech Construction.The total number of shares is 10.53 million, with CEO Kim Woo-young holding a 34.62% stake, and including specially related persons, the stake is 47.47%. The treasury stock is about 4.99%. Foreign ownership is 9.96% and distribution volume is approximately 35%.Lee Soo-hyung, CEO of Fine Asia Asset Management, said, “As of the first half of the year, the order backlog is reaching an all-time high of 445 billion won,” and judged, “The current corporate value is undervalued.” However, he said, “Because it is not a market-leading theme industry, it is marginalized.” He added, “There are expectations for performance, so there will not be much downward pressure on the stock price.”