KOSDAQSteel & Metals119500

Formetal

₩2,370▲ 0.42%2026-10-02 close

Market Cap

₩28B

Turnover

₩100M

Volume

40,000 shares

Shares out.

11.9M

PER

19.0×

PBR

0.6×

EPS

₩128

Dividend Yield

2.46%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩60 per share · Prices as of the 2026-10-02 close

Report overview

Revenue Slips, Margins Improve

Revenue has declined for three straight years, yet operating margin and net profit have improved, while robotics and defense theme interest has drawn market attention.

1
2025 consolidated revenue fell year-on-year to KRW 51.1bn, but operating margin improved to 3.8% and net profit attributable to owners rose to KRW 2.16bn.
2
The debt ratio steadily declined from 39.2% in 2022 to 21.0% in 2025, reflecting an improving financial structure.
3
Net profit attributable to owners over the trailing four quarters (Q3 2025-Q2 2026) showed a gradual recovery amid quarterly fluctuations.
4
The company has extended its precision forging technology into robot RV reducers and winch drums, placing it within the robotics and automation theme.
5
Its business is diversified across automotive, defense, shipbuilding, power generation, and petrochemical end-markets, supplying more than 150 customers.

Business structure

Formetal was founded in 1969 as Hyupjin Forging Industrial Co., converted to a corporation in 1985, changed its name to Formetal in 2009, and listed on KOSDAQ in 2010 as a precision forged machine parts specialist.

The company produces more than 800 types of forged products—including free forgings, die forgings, composite forgings, hollow forgings, and ring gears—supplied to roughly 150 customers.

Its key end-markets span automotive, defense, shipbuilding, power generation, petrochemicals, and medical equipment, covering nearly the entire machinery industry spectrum.

It also manufactures forged parts used in military vehicles and weapons systems such as tanks and armored vehicles, placing it among stocks classified as defense-related.

More recently, the company has extended its precision forging expertise into robot RV reducers, reducer gears, and winch drums, drawing it into the robotics and automation theme as well.

The forging industry is structurally sensitive to end-market cycles, government defense and infrastructure investment policy, and exchange-rate movements. Competition is fragmented across sub-markets—automotive parts, defense parts, and robot reducers—each populated by specialized rivals.

A relatively low dependence on any single large customer, spread across a broad customer base, is cited as a factor supporting revenue diversification.

Earnings trend

Quarterly revenue · Operating profit

₩18.1B₩1B25Q2₩16.9B₩400M25Q3₩0₩025Q4₩15.1B₩400M26Q1₩17.5B₩700M26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩69.6B₩2B2022₩71.1B₩2.1B2023₩65.1B₩1.5B2024₩51.1B₩1.9B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩18.1B	₩1B	5.6%
2025Q3	₩16.9B	₩400M	2.6%
2025Q4	₩0	₩0	—
2026Q1	₩15.1B	₩400M	2.4%
2026Q2	₩17.5B	₩700M	4.0%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩69.6B	₩2B	₩1.7B	2.9%	3.6%	39.2%
2023	₩71.1B	₩2.1B	₩1.9B	3.0%	3.9%	33.2%
2024	₩65.1B	₩1.5B	₩1.6B	2.3%	3.1%	24.3%
2025	₩51.1B	₩1.9B	₩2.2B	3.8%	4.2%	21.0%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23

Earnings analysis

2025 consolidated revenue was KRW 51.1147bn, down 21.5% from KRW 65.1491bn in 2024. Operating profit, however, rose to KRW 1.93987bn from KRW 1.49496bn a year earlier, lifting the operating margin from 2.3% in 2024 to 3.8% in 2025.

Net profit attributable to owners increased to KRW 2.15844bn in 2025 from KRW 1.56704bn in 2024, showing profitability improving even as revenue contracted.

Revenue held in the KRW 69.6-71.1bn range in 2022-2023 while operating margin stayed at 2.9-3.0%, then margin briefly dipped in 2024 as revenue fell before recovering in 2025. The debt ratio declined steadily from 39.2% in 2022 to 33.2% in 2023, 24.3% in 2024, and 21.0% in 2025, reflecting an improving balance sheet.

Operating cash flow rose from KRW 2.74991bn in 2022 to KRW 6.86232bn in 2024 before easing to KRW 4.88152bn in 2025.

Over the trailing four quarters (Q3 2025-Q2 2026), net profit attributable to owners was KRW 449.07m in Q3 2025, KRW 298.57m in Q4 2025, KRW 468.77m in Q1 2026, and KRW 596.00m in Q2 2026, showing a gradual recovery amid quarterly swings.

Revenue over the same span fell from KRW 18.13604bn in Q2 2025 to KRW 16.90384bn in Q3 2025, dropped further to KRW 15.14243bn in Q1 2026, then rose again to KRW 17.52225bn in Q2 2026.

Industry analysis

Forging is a classic cycle-sensitive industry, heavily influenced by end-market conditions, government defense and infrastructure investment policy, and exchange-rate movements. Korea's broader steel sector is seen as one where domestic demand contraction is moderating but recovery is delayed by weak exports.

In contrast, the defense sector remains buoyant: last year Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and KAI—the 'big four'—posted record combined revenue of about KRW 40.5 trillion and operating profit of roughly KRW 4.6 trillion, and large deals such as Egypt's FA-50 fighter jets and UAE helicopter exports are being pursued.

The automotive parts end-market continues to face softening demand, with cumulative global new-car demand through July 2026 down about 4% year-on-year, marking nine consecutive months of contraction.

The precision robot reducer market has long been over 80% dominated by Japanese makers, and domestic firms are still in an early stage of pursuing technology localization.

Formetal is referenced both as a defense-related stock and a robot reducer-related stock, giving it simultaneous exposure to several distinct end-market themes.

Outlook

In early January 2026, Hyundai Motor Group unveiled its physical-AI robotics strategy at CES 2026 and Boston Dynamics showed its next-generation electric Atlas, triggering a broad rally in robotics and automation-related stocks, with Formetal among the names that saw buying interest during that move.

Hyundai Motor Group stated plans to apply the robot to some HMGMA production processes from 2028 and expand its use to areas such as parts assembly from 2030 onward.

However, this is a mid- to long-term plan by the automaker and robotics group, and no disclosed order or supply contract confirming Formetal's specific volume in the project has been identified.

On the defense side, large K-defense deals such as Egypt's FA-50 export negotiations and UAE helicopter export coordination are in progress, but whether these translate into direct revenue contracts for Formetal has likewise not been confirmed through disclosure.

No company-specific revenue or profit guidance, nor capacity expansion plans, were identified in this review.

Overall, exposure to the robotics and defense themes continues to draw market attention, but whether it converts into actual new orders or mass-production contracts remains to be confirmed through future disclosures.

Valuation

PER

19.0×

PBR

0.6×

ROE

3.5%

EPS

₩128

BPS

₩4,365

Dividend per share

₩60

Net profit attributable to owners has shown a recovery over the trailing four quarters, even as annual revenue trended lower between 2022 and 2025. The share price trades below book value per share, placing it in a range that could be described as a discount to net asset value.

That said, during January's robotics and defense theme rally, the earnings multiple based on the prior day's close expanded well above typical levels on at least one occasion.

The company has a track record of paying an annual cash dividend, but since dividend yield moves with the share price, continuity of payment matters more than the absolute yield level at any given time.

Overall, this stock's valuation has tended to swing considerably with theme-driven flows rather than tracking earnings fundamentals alone.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-23

Bull factors

Inclusion in the Robotics/Automation Theme

The company is classified as a robotics-related stock due to its production of robot RV reducers, reducer gears, and winch drums using precision forging technology.

Hyundai Motor Group's robotics strategy reveal and Boston Dynamics' Atlas unveiling at CES 2026 triggered buying interest across the theme, with Formetal among the beneficiaries.

The early-stage push toward localizing precision robot reducer technology away from Japanese dominance is also cited as a mid- to long-term business opportunity.

Improving Balance Sheet

The debt ratio steadily fell from 39.2% in 2022 to 21.0% in 2025, improving financial stability. The fact that operating margin and net profit both rose in 2025 even as revenue declined suggests improvement in cost structure or product mix. Operating cash flow remained positive throughout 2022-2025.

Diversified End-Market Base

By supplying parts across automotive, defense, shipbuilding, power generation, petrochemical, and medical equipment industries, the company has relatively low dependence on any single sector's cycle.

It also manufactures forged parts for tanks and armored vehicles, giving it partial exposure to the currently thriving K-defense value chain. Revenue spread across roughly 150 customers reduces single-customer concentration risk.

Bear factors

Declining Revenue Trend

Consolidated revenue briefly rose from KRW 69.6bn in 2022 to KRW 71.1bn in 2023, but then declined for three straight years to KRW 65.1bn in 2024 and KRW 51.1bn in 2025. Continued revenue decline could raise questions about the sustainability of margin improvement.

Revenue over the trailing four quarters also fluctuated between roughly KRW 15.1bn and KRW 18.1bn without a clear rebound.

Early-Stage Robotics Business Risk

While robot reducer part production has drawn theme-based attention, no large-scale mass-production order has been confirmed through disclosure. Japanese makers control over 80% of the reducer market, and it is noted that domestic latecomers will need time to expand share.

Robotics theme stocks tend to react to news ahead of actual orders, meaning a pullback can occur once expectations fade without confirmed contracts.

Softening Automotive/Industrial Machinery Demand

Global new-car demand has contracted roughly 4% year-on-year on a cumulative basis through July 2026, marking nine consecutive months of decline. Automakers' capacity utilization adjustments and expanded contract manufacturing are variables that could affect order volumes for parts suppliers. Korea's broader steel sector is also assessed as facing delayed recovery due to weak exports.

Risk factors

Raw Materials/FX

The forging industry is exposed to steel raw material price and exchange-rate fluctuations, and adverse moves in either can raise cost burdens. Given its modest revenue scale, there may be a lag in passing on cost shocks to selling prices.

End-Market Concentration Risk

Earnings are tied to the order and investment cycles of specific end-markets such as automotive, defense, and industrial machinery. Changes in defense budgets or government defense policy, as well as automaker capacity adjustments, could increase earnings volatility.

Small-Cap Flow Volatility

As a small-cap KOSDAQ stock, short-term flows tend to swing sharply based on robotics- and defense-theme news. Because price reactions often precede actual earnings or order disclosures, a sharp reversal can occur once theme interest fades.

What to watch next

Around November 2026
The 2026 third-quarter results are expected around this time; check whether the revenue and operating margin improvement trend continues.
As new disclosures occur
Watch for any disclosed new orders or supply contracts for robot RV reducers to check whether theme-driven expectations translate into actual revenue.
During the second half of 2026
Monitor whether large K-defense deals such as Egypt's FA-50 or UAE helicopter exports are finalized, and assess any downstream impact.
Around the December 2026 fiscal year-end
Check the annual dividend policy disclosure for continuity of payment and any change in dividend size.

Overall view

Formetal is a small-cap KOSDAQ precision forged parts maker supplying automotive, defense, shipbuilding, and power generation end-markets, among others. 2025 consolidated revenue declined year-on-year, but operating margin and net profit attributable to owners improved, and the debt ratio continued to fall, pointing to a stabilizing balance sheet.

Results over the trailing four quarters (Q3 2025-Q2 2026) fluctuated but showed a gradual recovery on a net-profit-attributable basis.

The company has recently drawn market attention from its robot reducer parts production, the robotics theme spurred by CES 2026, and K-defense export expectations, though no specific new order disclosures related to these have yet been confirmed.

On the other hand, three consecutive years of revenue decline, softening global auto demand, and the company's position as a relative latecomer in the robot reducer market are factors that warrant balanced consideration.

Upcoming quarterly results and order-related disclosures will be worth watching to see whether the gap between theme and fundamentals narrows.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.