[비즈한국] Dawon Development, a family-owned firm belonging to the second and third generations of the Jungheung Construction Group, has recorded zero revenue since last year, following a net loss of tens of billions of won two years ago, drawing significant attention to the reasons behind this situation. Along with Saesol Construction, Dawon Development is viewed as a vehicle for future succession, as shares in both companies are held by third-generation members of the Jungheung Group family.
Dawon Development and Saesol Construction, the key companies for the third-generation succession of Jungheung Construction Group, were both established on February 6, 2014. Both companies share the same capital of 1 billion won and the same business objectives, such as real estate development and supply. Ownership is also identical, with Jungheung Engineering & Construction holding a 75% stake, while Vice Chairman Jung Won-ju's two children, Jung Jeong-gil (26) and Jung Seo-yoon (24), hold 20% and 5% respectively. Since Vice Chairman Jung Won-ju owns 100% of Jungheung Engineering & Construction, Dawon Development and Saesol Construction are essentially firms controlled by the second and third generations of the owner family. These are the only two companies in the group where the third generation holds equity. In the business world, these "twin" companies are expected to be utilized for the eventual succession.
However, the fact that Dawon Development has reported zero revenue since last year has sparked interest. Looking at the revenue over the past five years: 3.8 billion won in 2018, 24.5 billion won in 2019, 59 billion won in 2020, 82 billion won in 2021, 67.1 billion won in 2022, and 0 won in 2023. In 2022, despite recording nearly 70 billion won in revenue, the company posted a net loss of 38.2 billion won. It is understood that the company also recorded a loss of 300 million won last year. Total equity, which stood at about 58.5 billion won in 2021, shrank to 20 billion won last year.
Why did Dawon Development's revenue drop to zero? A Jungheung Construction official explained, "We understand there has been no revenue for two consecutive years because the company has been unable to secure land for development projects."
On the other hand, Saesol Construction has a relatively sounder financial position compared to Dawon Development. It recorded 320 billion won in revenue last year, and with total equity at around 185.2 billion won, the company is larger in scale than Dawon Development. Consequently, some have suggested that Saesol Construction and Dawon Development might merge to facilitate the third-generation succession process. Regarding this, a Jungheung Construction official replied, "We are not currently considering a merger of the two companies."
Jungheung Group is currently in the final stages of the succession process for the second-generation leader, Vice Chairman Jung Won-ju, with third-generation member Jung Jeong-gil considered the primary successor. Jung Jeong-gil joined Jungheung Construction as an assistant manager in 2021, moved to the strategic planning team at Daewoo E&C as a manager in 2022, and was promoted rapidly to executive director in charge of American development projects at Daewoo E&C in November of last year.