YulChon

Founded in 1986, Yulchon is a precision cold-drawn steel tube maker that listed on KOSDAQ in September 2023 through a SPAC merger.

Its core drawn steel tubes are used in automotive shock absorbers, suspension and steering systems, and clutch master cylinders, as well as in mining and construction equipment, heat exchangers, and furniture.

The bulk of revenue comes from automotive parts materials; one report put automotive parts materials at 95% of sales, while another breakdown shows automotive parts at 88%, mining equipment at 7%, with heavy equipment, industrial machinery and other items making up the remainder.

Production is based at the Siheung headquarters in Korea, a Mexican subsidiary established in 2014, and a Polish subsidiary established in 2022, forming a three-hub global network spanning Asia, the Americas, and Europe.

The Mexican subsidiary was established as a joint venture with POSCO and POSCO International and serves as an export base to the United States and Canada.

The company supplies more than 40 customers across 18 countries and has developed ultra-low-decarburization heat treatment technology that allows precision drawing of tubes ranging from 1-9mm in thickness and 10-120mm in outer diameter.

As a new growth driver, the company has secured seamless tube manufacturing technology through a government-backed research project and is building related production facilities at its Hwaseong plant.

Competitively, it operates as a materials supplier to automakers, auto parts companies, and industrial machinery makers, competing against domestic and overseas precision steel tube producers.

Annual revenue declined from 75.82 billion won in 2022 to 72.61 billion won in 2023, then recovered to 78.17 billion won in 2024 and 79.25 billion won in 2025. Operating profit fell from 5.15 billion won in 2022 to 4.12 billion won in 2023, before stabilizing at 5.16 billion won in 2024 and 5.08 billion won in 2025.

Net income attributable to owners swung from a profit of 2.95 billion won in 2022 to a large loss of 18.11 billion won in 2023, likely reflecting non-recurring impairment or similar one-off items.

The company then posted two consecutive years of profit, with 2.39 billion won in 2024 and 3.27 billion won in 2025, completing a turnaround from loss to profit.

On a quarterly basis, revenue of 19.42 billion won and operating profit of 872 million won (an operating margin of about 4.5%) in the second quarter of 2025 improved to revenue of 20.42 billion won and operating profit of 1.52 billion won (about 7.5% margin) in the third quarter.

In the fourth quarter of 2025, despite revenue of 19.59 billion won and operating profit of 634 million won, net income attributable to owners swung to a loss of 594 million won, suggesting the net loss stemmed from non-operating or one-off items given the operating-level profit.

In the first quarter of 2026, revenue reached 19.81 billion won with operating profit of 908 million won and owners' net income of 708 million won, while the second quarter of 2026 saw revenue of 23.05 billion won and operating profit of 2.32 billion won, lifting the operating margin to roughly 10.1% and marking a clear quarterly profitability improvement.

Over the trailing four quarters from the third quarter of 2025 through the second quarter of 2026, combined revenue reached 82.87 billion won, operating profit 5.39 billion won, and owners' net income 3.32 billion won, exceeding the full-year 2025 results.

The precision steel tube industry that Yulchon operates in is a classic cyclical sector directly linked to global vehicle production volumes and aftermarket parts demand. Fluctuations in the price of hot-rolled steel feedstock and exchange rates have a direct bearing on costs and profitability.

Beyond automotive parts, the company has been expanding into mining equipment, heavy equipment, industrial machinery, and heat exchangers, a move that appears aimed at reducing dependence on the automotive cycle.

In terms of global supply chain positioning, having production bases in Mexico and Poland in addition to Korea differentiates the company from domestic peers, a strategy interpreted as strengthening local supply responsiveness to North American and European automakers.

However, the Mexican production base is exposed to shifts in US tariff policy toward Mexico; in early 2025, a 25% US tariff on Mexican-origin products had an immediate impact on export volumes from the local operation.

In the domestic precision steel tube market, heat treatment technology and the ability to handle a wide range of sizes are cited as competitive advantages, and the company produces a broad product lineup from small to large diameters based on its ultra-low-decarburization heat treatment process.

The company plans to bring its seamless tube facility under construction at the Hwaseong plant into commercial production in November 2026; the line has an annual capacity of 18,000 tons and represents a total investment of 13.7 billion won.

Management expects seamless tubes to begin contributing to revenue from early 2027.

The new Poland plant is designed for annual capacity of 24,000 tons of pipe-forming and 16,000 tons of drawing, with completion and trial production targeted for the second half of 2026 and revenue contribution expected from the first half of 2027; at a September 2026 investor presentation, the company set targets of revenue contribution in 2027 and reaching breakeven in 2028.

Once the Poland plant is operational, the company expects to complete a three-hub global production system linking Korea, Mexico, and Europe, enabling it to target local automotive and electric vehicle parts markets in Europe.

The Mexican subsidiary's revenue has grown roughly 2.7-fold over the past five years, making it the most stable earnings base among the company's overseas operations.

However, simultaneous new facility investments in Hwaseong and Poland are generating near-term investment cost burdens, some of which appear to have been reflected in first-half 2026 results.