MIRA
INFORM REPORT
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Report Date : |
26.03.2007 |
IDENTIFICATION
DETAILS
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Name : |
KG CHEMICAL CORPORATION |
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Registered Office : |
429-1, Okgil-dong, Sosa-gu, Bucheon-si, Gyeonggi-Do - 422-080 |
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Country : |
Korea |
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Financials (as on) : |
31.12.2006 |
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Date of Incorporation : |
12/31/1954 |
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Legal Form : |
Listed Company |
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Line of Business : |
Manufacture of Composite Fertilizers |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Satisfactory |
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Payment Behaviour : |
Usually correct |
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Litigation : |
Clear |
Basic
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Company Name |
KG CHEMICAL CORPORATION |
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Registered Address/ Bucheon Factory |
429-1, Okgil-dong, Sosa-gu, Bucheon-si, GYEONGGI-DO, KOREA |
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Zip Code |
422-080 |
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Tel |
+82-2-2680-4114 |
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Fax |
+82-2-2680-4328 |
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E-mail |
jwkim@kgchem.co.kr |
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Website |
www.kgchem.co.kr |
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Trading Address |
429-1, Okgil-dong, Sosa-gu, Bucheon-si, GYEONGGI-DO, KOREA |
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Tel |
+82-2-2680-4114 |
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Fax |
+82-2-2680-4328 |
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Incheon Factory |
108B-4L, Namdong Industrial Complex, 658-1, Gojan-dong, Namdong-gu,
INCHEON, KOREA |
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Tel |
+82-32-819-0147 |
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Fax |
+82-32-821-0078 |
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Onsan Factory |
220, Ijin-ri, Onsan-eup, Ulju-gun, ULSAN, KOREA |
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Tel |
+82-52-231-1710 |
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Fax |
+82-52-231-1719 |
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Jeju Factory |
407-14, Geumneung-ri, Hallim-eub, Jeju-si, JEJU-DO, KOREA |
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Tel |
+82-64-773-2020 |
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Seosan factory |
936-9, Hwagok-ri, Daesan-eup, Seosan-si, Chungcheongnam-do, Korea |
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Type |
Export/Import |
|
Industry |
Manufacture of Composite Fertilizers |
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Main Business |
Composite Fertilizer, Concrete Admixture |
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Established (mm/dd/yyyy) |
12/31/1954 |
The Subject owns Bucheon factory(217,860.00㎡), Onsan
Factory(194,509.11㎡) and Jeju Factory(10,091.70㎡).
Detailed Products
|
Activity |
Detailed Products (UNSPSC) |
|
Sell |
Nitrogen Phosphorous Potassium Mixtures NPK(10171605) |
|
Sell |
Organic fertilizers and plant nutrients(10171500) |
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Sell |
Flocculents(47101608) |
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Sell |
Cement accelerators(12162302) |
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Sell |
Concrete and mortars(30111500) |
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Sell |
Chemical fertilizers and plant nutrients(10171600) |
CEO’s
|
Name |
Kwak Jae-Sun |
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Date of Birth |
01/15/1959 |
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Title |
Chairman & CEO |
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Sex |
Male |
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Nationality |
Korean |
Profiles
|
Capital |
55,808,245,000 KRW |
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Employees |
393 |
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Formation |
Listed Company (KSE : 001390) as
of 08/1989, A Company Of KG Chemical |
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Bank Details |
Korea Development Bank |
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Corporate Registered No. |
124311-0008999 |
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Business Registered No. |
130-81-09693 |
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Permit & Licenses |
Int’l Trade No.: 438988 |
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Shareholder Position |
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Company History |
2003. 10 Completed Corporate Closing
Procedure after paying 96,400,000,000 2003. 8 Changed the company name to KG Chemical
Corporation. 2003. 7 Changed Corporate Closing
Procedure by the Court 1999. 9 Started the Corporate Closing
Procedure by the Court 1998. 8 Enlarged
PNS factory to increase production.(Onsan 60,000 ton / year) 1998. 4 Separated
of water treatment, Liquid & Soluble Fertilizer department. 1997. 6 Concluded
technical introduction agreement for exclude Dioxin with Marker in Germany. 1997. 6 Completed
construction of BB fertilizer plant.(Jaeju 50,000 ton / year) 1997. 3 Completed
construction of BB fertilizer plant.(Onsan 40,000 ton / year) 1997. 1 Sparated
processing company of production department. 1996. 6 Enlarged
PNS factory to increase production.(Onsan 50,000 ton / year) 1994. 4 Completed
construction of PACS plant.(Onsan 15,000ton/year) 1993. 5 Completed
construction of PNS plant.(Onsan 8,500ton/year) 1992. 5 Completed
construction of Kyunggi Bulk Terminal in Onsan.(Berthing capacity:30,000DWT) 1991.10 Began production of
Clean-Magnesium Hydroxide.(Buchon, Onsan:45,000ton/year) 1990. 9 Completed
construction of compaction plant.(Onsan: SOP 10,000ton/year, BB fertilizer
20,000ton/year) 1989. 8 Opened
the enterprise to the public. 1988. 3 Enlarged
SOP plan.(Onsan 67,000 ton / year) (Total capacity: 90,000 ton / year) 1986.10 Began production of
MAG-SUL.(Buchon 25,000ton/year) 1985. 2 Completed
construction of compound fertilizer plant.(Onsan 90,000ton/year) 1982.11 Began production of SOP.(Onsan
22,500ton/year) 1977. 2 Began
production of compound fertilizer.(Buchon 105,000ton/year) 1973.12 Concluded collaboration contract
with Mitsubishi Corporation & Ildong FC. 1966. 6 Began
production of FMP.(Buchon 50,000ton/year) 1958. 9 Began
production of Limeston powder fertilizer. (Buchon
50,000 ton / year) 1955.12 Began production of Calcium
Hydroxide.(Buchon 30,000 ton / year) 1954.12 Founded Company |
The Subject is a Korea-based manufacturer
engaged in the provision of fertilizers. Headquartered in Gyeonggi Province,
Korea, the Company operates its business through four divisions: agricultural
biotechnology, construction, environmental and new material business divisions.
Its agricultural biotechnology business division provides fertilizers, bulk
blendings, slow release fertilizers, organic pellets and other related products
used for fruit trees and vegetables. Its construction business division offers
polynaphthalene sulfonates used in concretes. Its environmental business
division provides water treatment chemicals and other related products. Its new
material business division offers activators and other related products. During
the year ended December 31, 2005, the Company had an actual production output
of 430,000 tons of fertilizers. In 2005, the agricultural biotechnology
business division accounted for approximately 68% of total sales.
Management
|
Job Description |
Title |
Name |
Sex |
Nationality |
Inauguration Day |
|
Co-President & CEO |
Mr. |
Kwak Jae-Sun |
Korean |
59.01.15 |
- |
|
Co-President & CEO |
Mr. |
Lee Jeong-Seob |
Korean |
47.07.02 |
- |
|
Director |
Mr. |
Jang Ji-Hwui |
Korean |
64.08.30 |
Inha University |
|
Outside Director |
Mr. |
Cha Hyung-Hoon |
Korean |
58.07.26 |
- |
|
Auditor |
Mr. |
Lee-Deung-Hwa-Bu |
Japanes |
28.07.17 |
Tokyo Agricultural College |
Financials
Unit: KRW
|
Year |
Sales |
Assets |
Net income |
|
226,640,136,977 |
198,510,487,718 |
11,300,162,414 |
|
|
2004 |
227,202,444,066 |
179,934,912,795 |
9,639,921,857 |
|
2003 |
196,530,577,957 |
151,956,611,146 |
6,463,251,114 |
Financial Description
Unit: KRW
|
Authorized
Capital |
75,000,000,000 |
|
Paid-Up
Capital |
55,808,245,000 |
|
Total Issues Shares |
10,700,000 |
|
Balance Sheet |
|||
|
Unit : Korean Won |
As of 12/31/2006 |
As of 12/31/2005 |
As of 12/31/2004 |
|
Total Assets |
198,510,487,718 |
179,934,912,795 |
151,956,611,146 |
|
Current Assets |
138,776,584,883 |
111,956,524,387 |
91,910,475,255 |
|
-Quick Assets |
91,974,886,987 |
69,182,364,442 |
58,330,571,563 |
|
-Inventories |
46,801,697,896 |
42,774,159,945 |
33,579,903,692 |
|
Fixed Assets |
59,733,902,835 |
67,978,388,408 |
60,046,135,891 |
|
-Investment |
21,989,989,874 |
27,130,167,128 |
18,997,937,318 |
|
-Tangibles |
36,895,445,322 |
40,108,946,148 |
40,984,007,102 |
|
-Intangibles |
848,467,639 |
739,275,132 |
64,191,471 |
|
Total Liabilities |
104,534,978,896 |
94,986,138,717 |
77,236,660,301 |
|
Current Liabilities |
97,680,085,854 |
74,568,749,281 |
48,712,405,572 |
|
Fixed Liabilities |
6,854,893,042 |
20,417,389,436 |
28,524,254,729 |
|
Capital Stock |
55,808,245,000 |
55,808,245,000 |
55,808,245,000 |
|
Capital Surplus |
4,864,276,869 |
4,864,276,869 |
4,134,175,400 |
|
Profit Surplus |
33,436,414,623 |
24,276,252,209 |
16,696,998,552 |
|
Capital Adjustment |
(-)133,427,670 |
- |
(-)1,919,468,107 |
|
Total Equity |
93,975,508,822 |
84,948,774,078 |
74,719,950,845 |
|
Liab. & Shareholder’s Equity |
198,510,487,718 |
179,934,912,795 |
151,956,611,146 |
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Income Statement |
|||
|
Unit : Korean Won |
As of 12/31/2006 |
As of 12/31/2005 |
As of 12/31/2004 |
|
Sales |
226,640,136,977 |
227,202,444,066 |
196,530,577,957 |
|
Cost of Sold Goods |
175,560,057,322 |
181,384,105,012 |
157,323,428,928 |
|
Gross Profit |
51,080,079,655 |
45,818,339,054 |
39,207,149,029 |
|
Selling & Admin. Expenses |
32,109,325,909 |
31,445,900,789 |
28,737,970,778 |
|
Operating Income |
18,970,753,746 |
14,372,438,265 |
10,469,178,251 |
|
Non-Operating Income |
4,072,030,583 |
6,360,537,560 |
3,327,316,071 |
|
Non-Operating expenses |
7,867,952,832 |
8,381,520,498 |
5,691,883,716 |
|
Ordinary Income |
15,174,831,497 |
12,351,455,327 |
8,104,610,606 |
|
Special Income |
91,813,072 |
1,087,696,146 |
- |
|
Special Loss |
- |
645,747 |
- |
|
Income Before Taxes |
15,266,644,569 |
13,438,505,726 |
8,104,610,606 |
|
Income Taxes Expenses |
3,966,482,155 |
3,798,583,869 |
1,641,359,492 |
|
Net Income |
11,300,162,414 |
9,639,921,857 |
6,463,251,114 |
|
Cash Flows |
|||
|
Unit : Korean Won |
As of 12/31/2006 |
As of 12/31/2005 |
As of 12/31/2004 |
|
Cash Flows from Operating |
(-)693,954,152 |
2,141,260,129 |
7,613,481,701 |
|
-Net Income |
11,300,162,414 |
9,639,921,857 |
6,463,251,114 |
|
-Exp. without Cash Outflow |
11,005,169,562 |
11,167,055,665 |
8,168,503,388 |
|
-Revenue without Cash Inflows |
(-)1,720,693,449 |
(-)4,872,388,424 |
(-)1,011,884,227 |
|
-Changes in Asset/ & Liability |
(-)21,278,592,679 |
(-)13,793,328,969 |
(-)6,006,388,574 |
|
Cash Flows from Investing |
3,246,633,791 |
(-)16,086,713,140 |
(-)6,276,318,096 |
|
-Cash Inflow from Investing |
7,360,160,569 |
6,430,642,637 |
3,016,462,547 |
|
-Cash Outflows for Investing |
(-)4,113,526,778 |
(-)22,517,355,777 |
(-)9,292,780,643 |
|
Cash Flows from Financing |
(-)778,848,436 |
12,138,869,451 |
1,419,702,889 |
|
-Cash Inflows from Financing |
39,009,400,000 |
22,431,858,721 |
100,569,248,999 |
|
-Cash Outflows from Financing |
(-)39,788,248,436 |
(-)10,292,989,270 |
(-)99,149,546,110 |
|
Increase/Decrease in Cash |
1,773,831,203 |
(-)1,806,583,560 |
2,756,866,494 |
|
Cash at the Beginning of Year |
2,803,331,300 |
4,609,914,860 |
1,853,048,366 |
|
Cash at the End of Year |
4,577,162,503 |
2,803,331,300 |
4,609,914,860 |
Products,
Technologies, Services
Description
|
Main
Products & Services |
Bio-Agr Compound fertilizer Bulk blending
fertilizer(made-to-order) Fertigation & Soilless culture
fertilizer Slow-release fertilizer Phosphate fertilizer Potassium fertilizer Construction Materials POWERCON is a PNS(polynaphthalene
sulfonate) type superplasticizer which has made it possible to make
high-performance concrete. By using POWERCON in making concrete, the
properties of fresh concrete(workability) and hardened concrete(compressive
strength and durability) improve.. Environmental Started to supply Mg(OH)2 in 1991, which is
most economical Flue Gas Desulfurization, Poly Aluminium Silicate
Sulfate(PASS) in 1992, and more updated Poly Aluminium Chloride
Silicate(PACS) in 1993. Over 44 % of the doestic market share in this
coagulant field at present. and 45% of the market share in the Mg(OH)2 field. |
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Detailed
Products Spec. |
The Subject has been producing and
supplying the compounded fertilizer which is exclusively used for fruit trees
and vegetables. Since 1996, The Subject, as a company in
the fertilizer industry with the market share by 40%, has also made a
contribution to boost the farmer’s income and keep remaining fertile soil by
developing and supplying the customized, environment-friendly B.B. that is
suitable for soil and the crops and eventually enables environmental farming
and precise fertilization.
After completing POWERCON plant in 1993,
The Subject has been keeping the largest production capacity over 90 thousand
ton per year in the world. |
Trade Partners
|
Suppliers |
LS-Nikko Copper Inc. Sekwang Energy Hyupdong Chemical NAMHAE CHEMICAL CORPORATION |
|
Customers |
Nonghyup Gyungbuk Apple Association Dongbu Hannong Chemical Poongnong CHOBI CO.,LTD NAMHAE CHEMICAL CORPORATION Sales Channel Nonghyup: The Subject sells its products to
Nonghup’s local branches through Nonghyup. Factory=> Local Nonghyup
Branches=>Farmers Factory=>Customers Export: Sells through int’l trading
companies by local L/C. Payment Condition: Nonghyup: Cash within 91 days Others: Normally cash within 3 Months to 6
Months |
|
Competitors |
NAMHAE CHEMICAL Dongbu Hannong Chemical Poongnong CHOBI The Subject’s fertilizer is ranked as 2nd player next to NAMHAE CHEMICAL in terms of domestic market share. JMC The Subject’s CTC is ranked the 1st player
in terms of domestic market share. The domestic market share of The Subject’s POWERCON is about 60%. |
Related Parties
(Subsidiaries, Joint-
Venture &
Affiliates)
|
Affiliates |
KG CORPORATION KG JEJU KGO-China KG WERTECH KG ENERGY KOREA ENVIRONMENT ENERGY SEIL KONGYOUNG |
|
Subsidiary |
KG DYWELL INC. 429-1, Okgil-dong, Sosa-gu, Bucheon-si,
GYEONGGI-DO, KOREA TEL:+82-2-2680-4515~8 FAX:+82-2-2680-4519 KG EZCON 429-1, Okgil-dong, Sosa-gu, Bucheon-si,
GYEONGGI-DO, KOREA TEL:+82-2-2680-4410~7 FAX:+82-2-2680-4419 KG ASTECH 429-1, Okgil-dong, Sosa-gu, Bucheon-si,
GYEONGGI-DO, KOREA TEL:+82-2-2680-4381~3 FAX:+82-2-2680-4589 KG ENGINEERING 429-1, Okgil-dong, Sosa-gu, Bucheon-si,
GYEONGGI-DO, KOREA TEL:+82-2-2680-4541~4 FAX:+82-2-2680-4559 KG ALMATERA 429-1, Okgil-dong, Sosa-gu, Bucheon-si,
GYEONGGI-DO, KOREA TEL:+82-2-2680-4221~3 FAX:+82-2-2680-4209 KG BULK TERMINAL 143-1, Sanam-ri, Onsan-eup, Ulju-gun,
Ulsan, KOREA TEL:+82-52-239-1981~2 FAX:+82-52-238-7469 |
Sales by Region (Activity
& Markets)
|
Sales/ Unit :Mil KRW |
2005 |
2004 |
2003 |
|
Export |
32,447 |
30,830 |
19,480 |
|
Domestic |
194,755 |
165,700 |
120,533 |
|
Total |
227,202 |
196,530 |
140,013 |
The Subject imports the raw materials from China, Malaysia, Russia,
Israel and Jordan.
Court Action
|
Case No. |
Court |
Plaintiff(s)/
Creditor(s)/ Applicant(s) |
Defendant(s)/
Debtor(s)/ Respondent(s) |
Cause |
Amount (Thousand KRW) |
Status |
|
|
|
Lee Eun-Mi |
The Subject and Others(3) |
Claim for Damages |
250,000 |
1st Round Proceeding |
|
|
|
Lee Eun-Mi |
The Subject and Others(3) |
Claim for Damages |
20,000 |
1st Round Proceeding |
|
|
|
Kwon Hoi-Seob |
The Subject and Others(4) |
Apply for refunding illegal profits |
1,151,000 |
1st Round Proceeding |
|
|
|
Kwon Hoi-Seob |
The Subject and Others(4) |
Claim for Damages |
100,000 |
1st Round Proceeding |
|
|
|
Kwon Hoi-Seob |
The Subject and Others(1) |
Conformation no existing profits |
100,000 |
2nd Round Proceeding |
News Clipping
Sweet smell of profit comes from fertilizer firm
JoongangIlbo & Joins.com :11/19/2006
[JoongangIlbo Kim Tae-yun] KG Chemical Co., producer of fertilizer and
construction materials, has recently said its targeted revenue for 2010 is 1 trillion
won ($1.1 billion). It set the bar high, especially considering that company
sales last year were only 227.2 billion won. But to hear chairman Kwak Jae-sun
tell it, reaching 1 trillion won in five years is no pipe dream ― not for
a company that was under court receivership until 2003 and managed to turn
nearly 19 billion won in net profit.
Mr. Kwak acquired KG Chemical, then known as Kyeonggi Chemical
Industrial, in August of 2003, four years after the beleaguered company entered
court protection. He renamed the company to its current moniker and became the
chairman, with high ambitions.
“After conducting
due diligence on [the former Kyeonggi Chemical], I felt the company had
potential to turn profits quickly,” Mr. Kwak said. “Under good management, of
course.” Mr. Kwak, 48, credits his brother-in-law, Lee Jung-seop, a managing
director with Kyeonggi and now president of KG Chemical, for helping him right
the ship.
In its heyday, KG Chemical formed a triumvirate of Korea’s top
fertilizer companies, alongside Nam Hae Chemical Corp. and Dongbu Hannong
Chemicals. But poor management kept annual sales stuck at around 80 billion
won.
The low point came following the Asian financial crisis in the late
1990s: in March 1999, the company entered court receivership in Incheon as a
result of an inordinate amount of loans and excessive expansion. Adding insult
to injury, its president Kwon Hoe-seop was arrested on charges of illegal stock
trading.
Against this backdrop, Mr. Kwak’s immediate focus after taking the helm
was to establish efficient management. The first step was consolidating company
affiliates, reducing them from 25 to seven. For incumbent employees who felt
their job security was in danger, Mr. Kwak promised that not only would he not
cut any jobs, but he would actually give more work to the employees.
Instead of sitting at his desk twiddling his thumbs, Mr. Kwak worked on
his feet. He has talked so much with employees over the past three years that
he joked, “I might have spent more time giving lectures than managing the
company. ”The chairman then went out on the field, visiting suppliers of raw
materials overseas to negotiate prices, and with all the distance he traveled,
Mr. Kwak said he could have circled the earth twice. His logic was, “I figured
if the top executive showed up, I could get at least $1 off from them.” Thanks
to these efforts, KG Chemical reported 18.7 billion won in net income in 2003,
the inaugural year of Mr. Kwak’s leadership. But he refused to take credit for
the turnaround, saying, “The success is due to our employees, who understood my
intentions and worked together to bring about changes. ”To show his
appreciation, Mr. Kwak distributed some 27,000 treasury stocks to his workers
last month.
Having put the company back on the right track, Mr. Kwak has turned his
eyes toward transforming KG Chemical into a more environmentally friendly
organization. KG Chemical has increased production of fertilizer from organic
substances, and has developed compound fertilizers containing plant extracts.
Even though the fertilizer market is shrinking, Mr. Kwak feels that
there will still be room for environmentally friendly products. And he may just
be right. KG Chemical sales of chemical-based fertilizer fell in the first half
of this year, but sales of organic fertilizer enjoyed a 170-percent gain.
The chemical fertilizers are mostly being exported to China and
Southeast Asia, and in Tianjin, China, KG Chemicals and Japanese company
Mitsubishi Corp.’s fertilizer unit jointly established a fertilizer factory
early this year.
Mr. Kwak continues to dabble into environmentally-friendly business.
Last November, KG Chemical acquired Siwha Energy, a co-generation power
company. Co-generation technology captures excess heat created as a byproduct
of electricity generation, and allows a more complete use of energy than
conventional generation. On Sept. 1, KG Chemical opened the first store of the
organic vegetables retailer chain, Orfe.
Why so much activity in a short period of time? Mr. Kwak believes in
change.
“I tell my
employees to keep changing,” he said. “If you stand still, you might as well be
dead.” by Kim Tae-yun
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)