[Edaily Reporter Shin Ha-yeon ] On the 10th, independent research firm Value Finder analyzed that #BOWON CHEMICAL CO.,LTD. is expanding its growth drivers into the construction materials and organic light-emitting diode (OLED) materials businesses, building on the high market share and stable profitability it has secured in the automotive interior materials market. In particular, the firm projected that the expansion of vehicle models by automakers and the recovery in demand for home remodeling will support earnings growth. It did not provide an investment opinion or a target price.

Lee Chung-heon, CEO and analyst at Value Finder, stated in a report released that day, “The automotive interior materials industry is a market where large-scale capital expenditures and a track record of successful deliveries act as high barriers to entry,” adding, “Considering the company’s high market share and stable business structure, there is ample room for further profit growth in the future.”

Founded in 1994, BOWON CHEMICAL CO.,LTD. is a chemical materials processing company that went public on the KOSDAQ market in April of this year through a SPAC merger. It primarily produces surface materials for automotive interiors and construction materials; as of the first half of this year, its revenue breakdown was 64.2% from automotive interiors, 33.5% from construction materials, and 2.3% from functional sheet materials.

Its flagship products are thermoplastic polyolefin (TPO) and polyvinyl chloride (PVC) sheets used in automotive interior instrument panels and door trims. Materials processed by BOWON CHEMICAL CO.,LTD. are supplied to domestic and international automakers via Hanwha Advanced Materials.

The analyst explained, “Hanwha Advanced Materials holds approximately an 82% market share in the automotive interior materials market, and the TPO sheets manufactured by BOWON CHEMICAL CO.,LTD. account for over 90% of the market in five out of seven key automotive interior components.”

This high market share is also translating into stable profitability. BOWON CHEMICAL CO.,LTD. operates on a contract manufacturing model, processing raw materials procured by its clients rather than purchasing them directly. This structure allows the company to mitigate cost pressures stemming from fluctuations in international oil prices.

In fact, the gross profit margin rose from 13.4% in 2022 to 19.8% in the first half of this year. This is attributed to an expanded supply share following competitors’ withdrawal from the market, as well as the securing of stable processing volumes.

The upcoming launch of new models by automakers and their strategies to expand their lineup of premium vehicles were also cited as growth drivers. As domestic global automakers—BOWON CHEMICAL CO.,LTD.—plan to launch more than 100 vehicle models by 2030, BOWON CHEMICAL CO.,LTD. has secured production facilities for eco-friendly, lightweight, premium interior materials at its Plant No. 5.

The analyst predicted, “Despite the expansion of vehicle models, significant changes to the existing value chain are not expected,” adding, “A sales strategy focused on premium sedans and sport utility vehicles (SUVs) will lead to increased profits for BOWON CHEMICAL CO.,LTD., which has invested in dedicated production facilities for lightweight, eco-friendly premium interior materials and seats.”

The building materials business is also showing growth. BOWON CHEMICAL CO.,LTD. is the exclusive supplier of stone-plastic composite (SPC) flooring to domestic interior materials companies. As demand for interior renovations has expanded following a recovery in residential sales volume, the utilization rate of production facilities in this business rose from 68% last year to 91% in the first half of this year.

The OLED encapsulation film, which the company is pursuing as a new business, is also worth noting. The company is shifting its functional materials business—which had previously focused on solar materials—toward the display sector and is developing films for small- and medium-sized information technology (IT) devices such as laptops and tablets. The company aims to begin mass production within this year and plans to expand the share of this business in total revenue to over 20% in the medium to long term.

Financial performance continues to show growth. Last year, BOWON CHEMICAL CO.,LTD.’s revenue was 52.2 billion won, and operating profit was 5.1 billion won, representing year-over-year increases of 31.4% and 7.5%, respectively. In the first half of this year, revenue reached 28.7 billion won, up 11.1% year-over-year, while operating profit stood at 2.0 billion won.

However, due to increased R&D expenses for new businesses and depreciation costs for new facilities, the operating profit margin fell by 3.2 percentage points year-over-year to 7.0%. The company also posted a net loss of approximately 400 million won in the first half, but this was primarily due to the inclusion of 2.1 billion won in non-cash, one-time expenses incurred during the SPAC merger process.

The analyst stated, “The net loss in the first half was the result of one-time expenses unrelated to the company’s business performance,” adding, “With the factors driving additional merger-related expenses now eliminated, we expect the company to generate solid financial results based on its core business going forward, driven by the expansion of automotive interior trim applications, a recovery in residential remodeling demand, and the growth of the small- and medium-sized OLED display film business.”