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Hyundai Motor supplier Daewon Altech exits rehabilitation: Can it turn performance around?

[비즈한국] It has been confirmed that the rehabilitation process for Daewon Altech (formerly Dayou Global) has been concluded. Daewon Altech, a former affiliate of the Dayou Winia Group, entered rehabilitation in December 2023. As the Dayou Winia Group's management deteriorated, Daewon Altech could not avoid the aftermath. Daewon Altech was acquired by Daewon Cable006340 last December and successfully exited rehabilitation thanks to the support of Daewon Cable. The business world is focused on whether Daewon Altech can move beyond the conclusion of its rehabilitation and succeed in improving its performance.

Daewon Altech was established in 2014 when the automotive aluminum wheel division of DH Autonex (formerly Dayou Plus) was spun off. It has been a supplier of aluminum wheels to Hyundai Motor and Kia000270. In 2022, the company saw decent results, with DH Autonex posting 536.7 billion won in revenue and 22.2 billion won in operating profit, while Daewon Altech recorded 204.1 billion won in revenue and 4.1 billion won in operating profit. However, when the Dayou Winia Group faced a management crisis in 2023, DH Autonex and Daewon Altech could not escape the impact.

DH Autonex entered rehabilitation in November 2023, followed by Daewon Altech in December 2023. At the time, DH Autonex was the parent company of Daewon Altech. As of the end of September 2023, DH Autonex's total equity was -7.8 billion won, indicating a state of complete capital impairment. During the same period, Daewon Altech also fell into complete capital impairment with a total equity of -11 billion won.

Fortunately, breathing room was found as DH Autolead (formerly Dayou AP) acquired DH Autonex, and Daewon Cable acquired Daewon Altech. DH Autolead is a subsidiary of DH Global. DH Global is a partner to Samsung Electronics005930 and specializes in ODM (Original Design Manufacturing) and OEM (Original Equipment Manufacturing) for home appliances. Through its affiliate DH Autoware, DH Global also operates businesses related to automotive parts. Synergies can be expected with DH Autolead and DH Autonex, which also operate in the automotive parts sector.

DH Autonex announced in December last year that its rehabilitation process had ended. DH Autonex's revenue saw a slight decrease from 32.8 billion won in 2023 to 32.4 billion won in 2024. However, it successfully turned to a profit, posting an operating profit of 1.4 billion won in 2024 compared to an operating loss of 37.9 billion won in 2023. At least for now, the outlook is not negative.

The business community is watching to see if Daewon Altech can also successfully make a leap like DH Autonex. BizHankook's investigation confirmed that Daewon Altech concluded its rehabilitation process this February. It is reported that Daewon Cable put significant effort into ensuring the successful conclusion of the rehabilitation process for Daewon Altech. It has been confirmed that Seo Myung-hwan, Chairman of Daewon Cable, took office as the CEO of Daewon Altech this February, and his son, Executive Director Seo Jung-seok of Daewon Cable, was appointed as an internal director of Daewon Altech. This highlights Chairman Seo Myung-hwan's strong commitment to the rehabilitation of Daewon Altech.

At the time of the acquisition, Daewon Cable stated that the move was for business diversification. Daewon Cable spent a total of 18 billion won to acquire Daewon Altech, including funds from affiliates.

As Daewon Altech's 2024 performance has not yet been disclosed, it is too early to discuss the results of the acquisition. However, there are concerns as Daewon Cable has focused solely on the cable business and has no prior experience in the automotive parts sector. On the other hand, some analysts argue that because Daewon Cable consistently trades aluminum, which is used in cable manufacturing, there may be potential business synergies. BizHankook contacted Daewon Cable to get their position on this matter but did not receive a response.