Sunkyung E&C Climbs 48 Ranks to 74th Place Led by Logistics Centers

One of the construction companies that drew the most attention in the 2020 Construction Capability Evaluation ranking is Sunkyung E&C. This is because it climbed a massive 48 spots compared to the previous year, placing 74th. This construction company, whose name is unfamiliar to the general public, has already secured significant recognition in the retail market. While most construction companies clung to housing projects, Sunkyung E&C continuously focused on constructing logistics centers, cold storage/freezer warehouses, and automated factories for over 10 years.

Sunkyung E&C was established in February 2006. The founder and largest shareholder is Chairman Young Bin Lim, holding a 79% stake. The remaining 21% stake is held by Sun Kyung Lee, Chairman Lim's wife. Born in 1974, Chairman Lim is among the youngest owners of construction companies ranked within the top 100 in Construction Capability Evaluation. After starting his corporate career at a major construction company, he stepped onto the path of entrepreneurship in his early 30s.

Having paid early attention to the growth potential and commercial viability of the retail and logistics market, Sunkyung E&C steadily accumulated construction track records under Chairman Lim's aggressive leadership. Major construction achievements include LogisValley Ansan, SLK, Anseong, Hanaro, Icheon, Deokpyeong, and Gimpo; Coupang Incheon Logistics Center; Sajo Systems Pyeongtaek Logistics Center; BMW Anseong Parts Warehouse; Domino's Pizza Yongin Hub Center; Ottogi Incheon Logistics Center; and SsangYong Motor Suwon Service Center. It also operates its own PC (precast concrete) plant in Eumseong-gun, Chungcheongbuk-do (spanning 165,000 m² with an annual production capacity of 80,000 m³) to supply PC components while reducing costs.

Recently, moving beyond simple construction, it is expanding its scope into in-house development projects where it directly purchases land and develops it. Until 2018, construction revenue accounted for over 97% of Sunkyung E&C's total sales, but last year, the proportion of construction revenue decreased to 72%, while the proportion of development/sales revenue increased to 28%.

A representative in-house development project is the Sihwa MTV Logistics Center. Whumad, a wholly-owned subsidiary of Sunkyung E&C, served as the developer, while Sunkyung E&C handled the construction. Public land was supplied by K-water (Korea Water Resources Corporation). Funds were raised through a land trust loan via Korea Asset Trust. The lending syndicate included Shinhan Bank, Korea Development Bank, and Shinhan Capital. Construction broke ground in November 2016 and was completed in March last year. Subsequently, it was sold to CBRE Global Investors Asset Management for 374 billion KRW, realizing a profit of nearly 160 billion KRW.

Sunkyung E&C continued to expand. Its revenue, which was 129.6 billion KRW in 2014, increased to 153.1 billion KRW last year. During the same period, operating profit also more than doubled from 12.3 billion KRW to 30.3 billion KRW. The operating profit margin reached 19.8%, showing high profitability close to 20%. Despite being a new construction company with weak capital power and increasing the proportion of in-house development projects, its debt-to-equity ratio last year was only 18.7%. Total liabilities were a mere 45.5 billion KRW, whereas total equity was more than five times higher at 243.0 billion KRW.

A particularly notable aspect is that net income last year reached a massive 165.0 billion KRW. Compared to the previous five-year maximum net income of 36.1 billion KRW (2016), this is an increase of over 120.0 billion KRW. This is because it reflected the gain on the sale of Sihwa MTV.

As strong performance continued, Sunkyung E&C's Construction Capability Evaluation ranking also surged. After remaining at 140th and 123rd in 2015 and 2016 respectively, it entered the top 100 for the first time in 2017, ranking 98th. Afterward, it fell outside the top 100 again in 2018 and 2019, before making the largest ranking jump among companies within the top 100 this year to place 74th.

Sunkyung E&C's Construction Capability Evaluation value in the civil and building construction sector this year was 393.0 billion KRW, an increase of 83.9% compared to the previous year (213.6 billion KRW). Looking at the details, the management evaluation value surged 2.7-fold from 102.6 billion KRW to 275.8 billion KRW. The evaluation value in the building sector also increased 1.6-fold from 194.6 billion KRW to 316.8 billion KRW, driving the rank increase. An official from the Construction Association of Korea said, "While Sunkyung E&C's total equity increased, its liabilities decreased, leading to a significant rise in its financial condition value," adding, "The recent strong performance also contributed to the rise in ranking."

Last year, Sunkyung E&C's assets reached 288.5 billion KRW, an increase of 86.4% compared to the previous year. As a large inflow of cash occurred from the sale of Sihwa MTV, a virtuous cycle effect of increased profits and assets, alongside decreased liabilities, materialized.