KOSDAQIT & Software402030

Konan Technology Incorporation

₩13,080▲ 2.27%2026-10-02 close

Market Cap

₩161.7B

Turnover

₩200M

Volume

10,000 shares

Shares out.

12.5M

PER

—

PBR

7.2×

EPS

-₩692

Dividend Yield

0.00%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close

Report overview

AX Orders Rise, Profitability Still Pending

Konan Technology has grown revenue for four straight years on the back of expanding AI transformation (AX) orders in the public, legal, and defense sectors, but operating losses have persisted over the same period, making the timing of a shift from order growth to profitability the key point to watch.

1
2025 consolidated revenue rose to KRW 33.98 billion from KRW 26.32 billion a year earlier, but the company posted an operating loss of KRW 9.87 billion and a net loss attributable to owners of KRW 9.68 billion, marking a fourth straight year of losses.
2
In the fourth quarter of 2025 the company posted revenue of KRW 10.06 billion and a rare quarterly operating profit of KRW 127 million, but operating losses resumed in the first quarter of 2026 (-KRW 3.99 billion) and the second quarter (-KRW 2.82 billion).
3
The company said first-half 2026 revenue reached KRW 8.05 billion, up 7.9% year on year, with gross profit turning positive at KRW 499 million.
4
The total order backlog stood at KRW 22.5 billion as of the first-half 2026 close, and the company has secured projects from all three key legal institutions—the Supreme Court, Ministry of Justice, and Ministry of Government Legislation.
5
A 2025 rights offering of roughly KRW 29.05 billion lifted total equity from KRW 19.62 billion in 2024 to KRW 29.56 billion in 2025, and the debt ratio fell from 126.2% to 54.0%.

Business structure

Founded in 1999, Konan Technology is a first-generation Korean AI and big-data software company built around its enterprise AI search solution (Konan Search) and proprietary large language model (Konan LLM).

Its business spans the public sector, legal domain, power generation, defense, and manufacturing, and it has won projects from all three key national legal institutions—the Supreme Court's AI trial-support system, the Ministry of Justice's next-generation criminal justice information system (KICS), and the Ministry of Government Legislation's generative-AI statute search system.

In power generation, the company is understood to have built Konan LLM-based internal generative-AI platforms at three of the five major state-run power generators, including Korea Southern Power, Korea Western Power, and Korea East-West Power.

In defense, it cooperates with roughly 20 institutions across recognition and judgment, platform construction, and smart power-support fields, and is developing an 'AI Staff Officer' solution for military intelligence analysts.

More recently it began a manufacturing AX project with auto-parts maker Seoyon E-Hwa to build 20 types of manufacturing AI agents, and is also running a fault-diagnosis AI automation project with defense-parts maker Yeongpoong Electronics, extending its customer base from defense and public sectors into manufacturing and defense industry supply chains.

Because much of its revenue comes from system-integration-style contracts recognized upon project completion, quarterly results show pronounced swings.

Competitively, the company forms LLM/NPU-based partnerships with players such as Naver Cloud and Rebellions to build a domestic AI ecosystem alliance, while trying to differentiate from global big-tech firms through customized deployment capability in security-sensitive public and specialized domains.

Earnings trend

Quarterly revenue · Operating profit

₩3.4B-₩4.5B25Q2₩16.5B-₩1.6B25Q3₩10.1B₩100M25Q4₩3.9B-₩4B26Q1₩4.2B-₩2.8B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩15.4B-₩4B2022₩24.4B-₩11B2023₩26.3B-₩14.1B2024₩34B-₩9.9B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩3.4B	-₩4.5B	−131.3%
2025Q3	₩16.5B	-₩1.6B	−9.4%
2025Q4	₩10.1B	₩100M	1.3%
2026Q1	₩3.9B	-₩4B	−102.9%
2026Q2	₩4.2B	-₩2.8B	−67.6%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩15.4B	-₩4B	-₩3.3B	−26.3%	−8.1%	22.8%
2023	₩24.4B	-₩11B	-₩9.8B	−45.0%	−31.3%	53.1%
2024	₩26.3B	-₩14.1B	-₩13.6B	−53.6%	−69.3%	126.2%
2025	₩34B	-₩9.9B	-₩9.7B	−29.0%	−32.8%	54.0%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-21

Earnings analysis

Consolidated revenue grew for four consecutive years, from KRW 15.39 billion in 2022 to KRW 24.43 billion in 2023, KRW 26.32 billion in 2024, and KRW 33.98 billion in 2025.

Operating losses, however, widened from KRW 4.04 billion in 2022 to KRW 10.99 billion in 2023 and KRW 14.11 billion in 2024 before narrowing to KRW 9.87 billion in 2025, with operating margin improving from -26.3% to -45.0% to -53.6% and then to -29.0% in 2025.

Net loss attributable to owners also narrowed from KRW 13.60 billion in 2024 to KRW 9.68 billion in 2025.

On a quarterly basis, after operating losses of KRW 4.45 billion in the second quarter of 2025 and KRW 1.55 billion in the third quarter, the fourth quarter saw revenue of KRW 10.06 billion and a rare operating profit of KRW 127 million along with net income of KRW 213 million, a pattern that reflects the structural tendency for revenue on public-sector projects to be recognized in a lump sum upon completion.

That said, the company returned to losses in the first quarter of 2026 with revenue of KRW 3.88 billion and an operating loss of KRW 3.99 billion, and in the second quarter with revenue of KRW 4.17 billion and an operating loss of KRW 2.82 billion.

Operating cash flow was negative for four straight years—KRW -4.69 billion in 2022, KRW -6.84 billion in 2023, KRW -2.25 billion in 2024, and KRW -7.51 billion in 2025—indicating the business has yet to generate cash from operations alone.

On the balance sheet, the 2025 rights offering lifted total equity from KRW 19.62 billion in 2024 to KRW 29.56 billion in 2025 while the debt ratio fell from 126.2% to 54.0%, easing near-term capital impairment concerns.

Industry analysis

AI transformation (AX) investment in Korea's public and industrial sectors is expanding alongside larger government policy budgets, with some analysis projecting the 2026 government AI/AX-related budget to roughly triple from the prior year.

Against this backdrop, public agencies, state-run power generators, and legal institutions tend to favor vendors with domestic LLM capability and customized deployment experience for security and data-sovereignty reasons, creating a relatively favorable environment for a company like Konan Technology that has built a long public-sector track record.

Competitively, general-purpose LLMs from large players such as Naver Cloud and SK Telecom coexist with smaller AI firms specialized in particular domains, and Konan Technology emphasizes its track record in specialized domains such as law, defense, and power generation as a competitive edge.

The company's COO recently said in an interview that the decisive factor has shifted from raw AI model performance gaps to real-world field execution capability.

That said, because revenue recognition tends to cluster around public-sector budget and procurement schedules, there can be a lag between sector-wide growth and any individual company's quarterly results.

Expansion into manufacturing and defense-industry supply chains is still at an early stage, and it will take time to validate revenue contribution relative to the public sector.

Outlook

The company has said it plans to invest a total of KRW 26.7 billion in research and development over three years using proceeds from its 2025 rights offering—KRW 2.9 billion in 2025, KRW 11.7 billion in 2026, and KRW 12.1 billion in 2027.

The goal is to advance its proprietary AI foundation model into a version optimized for specialized domains such as defense and manufacturing, and the company is reportedly pursuing participation in the Ministry of Science and ICT's 'sovereign AI foundation model' program.

Its generative-AI statute search system project for the Ministry of Government Legislation is a large public AX project running in two phases over a total of 550 days from contract date, executed through a consortium that includes Synap Software.

In manufacturing, the Seoyon E-Hwa AX project and a 12-month, KRW 1.88 billion fault-diagnosis AI project with Yeongpoong Electronics for defense-industry parts are underway, and the company said it reorganized by integrating its defense and strategy business unit with its AI research institute into a 'field-centered AI engineering' structure.

Management has stated its intent to accelerate second-half growth by extending vertical AI competitiveness built in defense and public sectors into manufacturing, based on revenue growth, improving profit-and-loss structure, and a maintained order backlog.

Even so, the timing and scale at which these new initiatives will materially show up in revenue still need to be confirmed.

Valuation

PER

—

PBR

7.2×

ROE

-51.0%

EPS

-₩692

BPS

₩1,898

Dividend per share

₩0

Konan Technology's shares tend to trade at a substantial premium to net asset value, a pattern often seen when the market prices in future growth expectations for a company that has not yet turned a profit.

Total equity increased following the 2025 rights offering, but four consecutive years of net losses mean profit-based valuation metrics remain difficult to apply meaningfully.

Having posted a single quarter of operating profit in the fourth quarter of 2025 before returning to losses in the first half of 2026, it remains unconfirmed whether the company has durably shifted from loss to profit on an annual basis.

The company does not currently pay a dividend, so dividend-related metrics offer little guidance on investment appeal. Ultimately, the current share price level appears to reflect expectations about future order growth and the pace of profit improvement more than it reflects past reported earnings.

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 2026-08-21

Bull factors

Near-monopoly public and legal-sector references

Having won projects from all three key legal institutions—the Supreme Court, Ministry of Justice, and Ministry of Government Legislation—and built platforms at three of five state-run power generators, the company has accumulated hard-to-replicate execution experience in security-sensitive public domains.

Such references can function as a barrier to entry when bidding for new public projects. The KRW 22.5 billion order backlog at the end of the first half of 2026 provides a base for future revenue recognition.

Signs of profitability improvement, including a gross-profit turnaround

The 2025 operating margin improved from the prior year, and the company said gross profit turned positive in the first half of 2026. This is attributed to easing cost pressure and AI-driven operational efficiency gains.

If cost structure stabilizes alongside revenue growth, the pace of profit-and-loss improvement could accelerate.

Expansion into manufacturing and defense-industry supply chains

The company is broadening beyond its defense-and-public-sector core into manufacturing and defense-industry customers such as Seoyon E-Hwa and Yeongpoong Electronics, seeking new revenue sources.

If the government's expanding AI/AX budget trend continues, there is room for additional orders in these new areas, though this is still at an early stage and the scale of revenue contribution needs to be confirmed.

Bear factors

Four straight years of operating losses and cash burn

Operating losses persisted from 2022 through 2025, and operating cash flow was negative for four consecutive years. Despite a narrower loss in 2025 and a one-quarter profit in the fourth quarter, the return to losses in the first half of 2026 means a sustained turnaround to profitability has not yet been confirmed. The company has not yet established a structure that generates cash internally without external financing.

Volatility from project-based revenue recognition

Because most revenue is recognized in a lump sum upon completion of public and institutional projects, quarterly results show large swings. The fourth-quarter 2025 profit followed by losses in the first and second quarters of 2026 is interpreted as a reflection of this recognition structure.

Whether an improvement in a given quarter carries through to an annual trend requires confirmation in subsequent quarters.

Past capital-impairment risk and potential for further fundraising

As accumulated deficits grew, capital-impairment risk emerged in 2025 and was addressed through a rights offering. Given plans for further large R&D outlays, if revenue and profit improvement fall short of expectations, the possibility of needing additional external financing cannot be ruled out.

Risk factors

Financial soundness

Four consecutive years of net losses and negative operating cash flow point to a structure heavily reliant on external financing. The 2025 rights offering lowered the debt ratio to 54.0%, but delayed profit improvement could reintensify financial strain. The possibility of renewed capital-impairment risk warrants ongoing monitoring.

Concentrated revenue recognition timing

Because revenue recognition depends on public-sector procurement and budget execution schedules, results in any single quarter may not represent the annual trend. Delays in government budget allocation or project scheduling could push back revenue recognition timing.

Intensifying competition and technology shifts

Both general-purpose LLMs from large cloud and telecom providers and specialized domestic and international AI firms are simultaneously targeting public and enterprise markets, raising the potential for intensifying competition.

Rapid generational shifts in AI model technology require continued R&D investment, which can translate into ongoing cost pressure.

What to watch next

Mid-November 2026
This is the expected timing for the third-quarter 2026 report, when it will be worth checking whether the pattern of revenue and profit concentrating in a specific quarter—seen in the fourth quarter of 2025—recurs, and whether the annual profit-improvement trend continues.
Second half of 2026 through early 2027
This is when the results of the Ministry of Science and ICT's 'sovereign AI foundation model' program are expected to be announced, including whether Konan Technology is selected. The outcome could affect the direction of future R&D investment and the scale of government support.
Fourth quarter of 2026 (National Assembly budget review period)
It will be worth confirming whether AI/AX-related budget allocations are finalized during the review of the 2027 government budget. Given the company's heavy reliance on public-sector revenue, the size of this budget can directly affect future order momentum.
First half of 2027
This is a point to check progress on the first phase of the Ministry of Government Legislation's generative-AI statute search project (a 550-day, two-phase undertaking), as well as whether results are announced for manufacturing and defense-industry projects with Seoyon E-Hwa and Yeongpoong Electronics.

Overall view

Konan Technology shows a dual earnings pattern of steadily rising revenue from 2022 through 2025 alongside persistent operating losses over the same period.

In 2025 there were signs of improvement, including a narrower operating loss than the prior year and a one-off profitable fourth quarter, but the return to losses in the first half of 2026 means it remains unconfirmed whether a structural turnaround to profitability has taken hold.

Public-sector references spanning all three key legal institutions—the Supreme Court, Ministry of Justice, and Ministry of Government Legislation—along with multiple state-run power generators and defense institutions, represent a competitive advantage, but the project-completion-based revenue recognition structure means quarterly volatility is likely to persist.

The 2025 rights offering has for now eased capital-impairment risk, but four consecutive years of negative operating cash flow show the company still relies on external financing.

Expansion into manufacturing and defense-industry supply chains through customers like Seoyon E-Hwa and Yeongpoong Electronics has potential as a new growth axis, but it remains early-stage and the scale of revenue contribution needs to be confirmed through future results.

Ultimately, the points to watch going forward are the scale of government AI/AX budget execution, the durability of new order intake, and whether narrowing losses and quarterly profitability translate into a stable annual-level trend.

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.