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Dayou A-Tech adds 'solar power' to business objectives… Will it become the group's 'energy source'?

[비즈한국] It has been confirmed that Dayou A-Tech002880 has added solar power-related business to its corporate objectives. Most affiliates of the Dayou Winia071460 Group entered rehabilitation proceedings in 2023. Among them, some affiliates have been sold, while others are still undergoing rehabilitation. Dayou A-Tech is one of the few Dayou Winia Group affiliates currently operating normally. Park Eun-jin, Vice President of Dayou A-Tech and second daughter of Dayou Winia Group Chairman Park Young-woo, is currently employed at the company. The business world is focusing on whether Dayou A-Tech can successfully restore its reputation through the solar power business.

Dayou Winia Group virtually disintegrated while experiencing a management crisis in 2023. Dayou AP (now DH Auto Lead), Dayou Plus000300 (now DH Auto Nex), Dayou Global (now Daewon Altech), and Dayou Alloy (now Daewon Alloy) were sold. Winia and Winia Electronics are undergoing rehabilitation procedures. It is reported that the sale of Winia and Winia Electronics is currently underway.

Currently, the companies under Chairman Park Young-woo’s control that are generating meaningful revenue are limited to Dayou A-Tech, Dayou Holdings, and Dongkang Holdings. Among these, Dayou A-Tech involves Chairman Park’s second daughter, Vice President Park Eun-jin, in management as an executive director. Vice President Park Eun-jin took office as an executive director at Dayou A-Tech in 2019 and was promoted to vice president in 2023. As Chairman Park Young-woo is currently embroiled in legal battles, having been sentenced to four years in prison for violating the Labor Standards Act last February and subsequently appealing, Vice President Park Eun-jin has stepped to the forefront of Dayou A-Tech’s management.

Dayou A-Tech held a shareholders' meeting on the 25th and added 'solar power generation business' to its business objectives. It is understood that this decision was made with eco-friendly energy production through solar power in mind. Dayou A-Tech currently has no significant business other than automotive parts manufacturing. Last year, 561.1 billion won, or 99.33% of its 564.9 billion won revenue, came from the automotive parts business. Diversification is necessary, if only to prepare for a slowdown in the automotive market.

In fact, Dayou A-Tech was involved in the solar power business back in the 2000s. In 2010, it established a new subsidiary, Dayou SE, by spinning off its solar power division. Later, in 2018, Dayou SE sold the Chungju plant, which handled the solar power business, to Dayou Plus, and Dayou Plus was recently sold to DH Global. Naturally, the solar power business of Dayou Winia Group also moved to DH Global.

The outlook for the solar power business is generally positive. Ahn Joo-won, a researcher at DS Investment & Securities, explained, "When comparing by power source, solar power is considered an expensive energy source, but it has gained price competitiveness since 2022 due to the increase in industrial electricity rates." He added, "Solar power generation, which has grown rapidly based on government policies, is increasing its generation capacity every year, and it accounted for 6% of the power generation mix as of 2023."

The problem is Dayou A-Tech's investment capacity. This is because its recent financial situation is not good. According to its business report, Dayou A-Tech's debt-to-equity ratio reached 658.88% as of the end of last year. While it recorded a surplus with 564.9 billion won in revenue and 37.5 billion won in operating profit last year, its cash and cash equivalents stood at only 480.97 million won at the end of last year, while total liabilities amounted to 290.6 billion won.

Min Won-sik, a senior researcher at Korea Ratings, assessed Dayou A-Tech by stating, "Although the company raised funds by selling affiliate shares and idle assets, continuous capital outflows related to affiliates have led to a persistently heavy financial burden and insufficient liquidity response." He added, "While the company plans to secure liquidity through self-rescue measures, its overall ability to respond to liquidity needs remains at an inadequate level."

BizHankook contacted Dayou A-Tech to hear its stance regarding future business directions, but a Dayou A-Tech official stated, "There is currently no one in charge of responding to the media."