[The Economist, Reporter Park Se-jin] Cities don’t just grow upward. If high-rise buildings and high-tech industrial complexes are the face of a city, the water and sewer pipes underground are the blood vessels that sustain it. The problem is that these blood vessels are rapidly aging. While big data and artificial intelligence (AI) are transforming industries, the infrastructure beneath our roads remains stuck in outdated methods centered on excavation and replacement.

NUVOTEC Co., Ltd(060260), a company specializing in environmental infrastructure, has set its sights squarely on this outdated approach. Having manufactured water and sewer pipe materials for over 30 years, the company now aims to shed its label as a mere manufacturer. It plans to transform itself from a traditional manufacturer supplying water and sewer pipe materials into an infrastructure technology company that revitalizes aging pipelines without digging.

In an interview, Hwang Hee-seon, co-CEO of NUVOTEC Co., Ltd., shared insights into NUVOTEC Co., Ltd.’s water and sewer technology, its trenchless pipeline reinforcement and rehabilitation methods, and the behind-the-scenes story of how SK hynix(000660) secured its waste treatment contract.

◇Hwang Hee-sun’s Transformation Initiative
NUVOTEC Co., Ltd’s transformation began with its core business. NUVOTEC Co., Ltd is a company specializing in piping materials that has grown primarily through the production of PVC water and sewer pipes. Water and sewer pipes form the most fundamental backbone of urban infrastructure. While their presence is often taken for granted, once a problem arises, the impact on all aspects of citizens’ lives is significant. Most issues—such as △leaks and sinkholes, △road subsidence, and △water pollution—are directly linked to aging underground pipelines.

CEO Hwang stated, “Water and sewer pipes are not merely materials; they are essential infrastructure for cities to function properly,” adding, “NUVOTEC Co., Ltd’s core business is to build the foundation for supplying clean water and safely treating contaminated water.”

However, the market NUVOTEC Co., Ltd. is targeting is different from what it was in the past. The company has determined that growth is limited if it relies solely on manufacturing and supplying pipes. Local governments and public institutions also find it difficult to solve problems using only excavation-based methods to replace aging pipelines due to budgetary constraints and various public complaints. The method of digging up roads to replace entire pipes entails not only high costs but also traffic disruptions, noise, and safety issues.

For this reason, NUVOTEC Co., Ltd is focusing its efforts on trenchless pipe reinforcement and rehabilitation methods. Trenchless methods are technologies that reinforce or restore the interior of existing pipelines without extensive excavation. By forming new structures inside aging pipes or reinforcing damaged sections to extend their service life, these methods reduce construction time and costs compared to traditional excavation methods while minimizing disruption to urban life.

CEO Hwang emphasized, “The core challenge for urban infrastructure is no longer building new infrastructure, but rather using it for a long time and managing it safely,” adding, “NUVOTEC Co., Ltd must also evolve beyond simply being a company that manufactures pipes to become a firm that diagnoses, reinforces, and manages aging pipelines.”

Another pillar of this transformation is AI. NUVOTEC Co., Ltd is preparing to launch a business involving AI-based pipeline inspection robots, in addition to its trenchless construction methods. This technology uses robots to inspect underground pipelines that are difficult for humans to access, analyze the degree of deterioration and the likelihood of damage, and then propose repair priorities based on accumulated data.

CEO Hwang explained, “Water and sewage infrastructure will ultimately transform into a data-driven industry,” adding, “Rather than replacing pipes indiscriminately, we must establish a system that first diagnoses which sections are most at risk and reinforces them starting with the areas that need it most.”

He cited NUVOTEC Co., Ltd.’s manufacturing experience, accumulated over more than 30 years, as the company’s core competitive advantage. Having manufactured water and sewer pipes for so long, the company possesses a deep understanding of pipeline structures and site-specific conditions. He explained that the company knows better than anyone else not only how pipes deteriorate under various environmental conditions but also which reinforcement methods are most effective.

CEO Hwang said, “A company that has been manufacturing pipes for over 30 years ultimately knows pipes best,” adding, “Based on our manufacturing technology and field experience, we will establish an integrated service that encompasses everything from pipeline diagnosis to reinforcement and maintenance.”

◇Securing Contracts with Major Corporations Through Technology
NUVOTEC Co., Ltd’s transformation extends beyond the water and wastewater sector. Starting July 1, the company will also begin full-scale operations to process solid designated waste generated at SK hynix’s semiconductor plants. For NUVOTEC Co., Ltd, this means more than just securing a new contract; it marks the starting point for reestablishing business with major corporations and cultivating the resource recycling business as a new growth engine.

CEO Hwang said, “This contract was not secured solely through price competitiveness,” adding, “It is the result of a comprehensive evaluation of our occupational safety and health management capabilities, environmental response systems, logistics efficiency, and accumulated operational experience.”

He continued, “The most difficult part was proving the trust we had lost not with words, but with numbers and systems,” adding, “To achieve this, we invested in equipment and completely overhauled our work processes, and ultimately, those efforts have borne fruit.”

This contract is expected to accelerate the pace of NUVOTEC Co., Ltd’s performance improvement. Solid waste generated by SK hynix can be recycled into high-value-added raw materials, such as recycled pellets, through a processing procedure.

NUVOTEC Co., Ltd. plans to sort, wash, and grind this material before supplying it to domestic and international customers. As rising oil prices coincide with growing demand for eco-friendly raw materials, the growth potential of the recycled plastics market is increasing; consequently, the resource recycling business is expected to establish itself as a new source of revenue.

CEO Hwang emphasized the significance of the deal, stating, “This is not merely a waste disposal business, but a circular economy initiative that transforms high-value-added resources back into industrial raw materials.” He added, “This contract with SK hynix marks the starting point for NUVOTEC Co., Ltd’s Recycling Business Division 2.0 and a turning point in our leap toward becoming an eco-friendly resource recycling company.”

He noted, “In high-tech industries, environmental management capabilities are just as much a competitive advantage as production technology,” adding, “NUVOTEC Co., Ltd aims to establish itself as an eco-friendly partner supporting the sustainable growth of South Korea’s high-tech industries.”

However, CEO Hwang drew a clear line, stating, “This does not mean NUVOTEC Co., Ltd is abandoning its traditional business.” He explained, “PVC water and sewage pipes remain essential products that are difficult to replace for maintaining clean water quality and urban infrastructure,” and added, “We will build a stable business portfolio by further strengthening our core business competitiveness while cultivating the resource circulation business as another growth engine.”

He continued, “We will share the fruits of growth generated through structural reforms with our shareholders,” adding, “We plan to continuously expand our shareholder return policies, including share buybacks and cancellations, as well as cash dividends.”

However, challenges remain. NUVOTEC Co., Ltd has faced market skepticism due to its past poor performance and the process of restructuring its business.

CEO Hwang said, “NUVOTEC Co., Ltd’s current enterprise value does not fully reflect its intrinsic competitiveness and growth potential in the market,” adding, “Ultimately, the surest way to resolve this market undervaluation is through solid performance.”

He continued, “We cannot gain the market’s trust with mere blueprints,” and emphasized, “We will steadily build on our core business competitiveness, secure orders primarily from leading conglomerates, and achieve results in our AI-based new businesses, so that the market will reassess NUVOTEC Co., Ltd’s value on its own.” He added, “Corporate value is created by results, not words. We will ensure the market reassesses NUVOTEC Co., Ltd on its own.”