Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Equity Capital Markets

YMT Co., Ltd. basically manufactures and supplies chemicals used for the surface treatment of various PCBs (printed circuit board). The company was founded in 1999 and is based in Incheon, South Korea. Founder and current CEO Jeon Seong-wook has a bachelor's degree in Metallurgical Engineering and started his career at Houghton Korea as a surface treatment engineer. He had worked there for about 13 years. Houghton Korea is a JV set by the US based Houghton International &amp; Inc. When he started his career at Houghton, Korea's plating chemical industry lagged far behind such power nations as the US, Germany and Japan. So, with the knowledge and know-how he had obtained from Houghton, he decided to take on a huge challenge to catch up the world's leaders in this field, Germany's Atotech $(<a href="http://www.atotech.com" target="_blank">www.atotech.com</a>), Japan's <a href="https://www.smartkarma.com/entities/1197" target="_blank" data-smartkarma-citation="entities:1197:1">C Uyemura &amp; Co Ltd (4966 JP)</a> (<a href="http://www.uyemura.com" target="_blank">www.uyemura.com</a>) and Okuno (<a href="http://www.okuno.co.jp" target="_blank">www.okuno.co.jp</a>) also from Japan. This was how his company was started. He founded YMT in 1999. As many businesses in their early phase, YMT had struggled to build a solid business foundation for about 5 years. In particular, this is a chemical processing business, which usually requires many years of initial product development. The company hadn't had many happy moments until 2005. But a huge opportunity finally came to Jeon and his company in 2005 when the Korean regulators banned the use of lead in PCB. Back then, it was not rare to use lead as an adhesive in PCB plating process. YMT didn't waste this opportunity to break into this market.The company developed and introduced a new plating method for PCB, which didn't use any lead. This was called "Silver Electroless-Plating Process". <a href="https://www.smartkarma.com/entities/539" target="_blank" data-smartkarma-citation="entities:539:1">Samsung Electro Mechanics Co., Ltd. (009150 KS)</a> was impressed by YMT's new method so it gave YMT a supply contract. YMT also got a supply contract from <a href="https://www.smartkarma.com/entities/2212" target="_blank" data-smartkarma-citation="entities:2212:1">Daeduck Electronics Co (008060 KS)</a> in the same year. This moment was the beginning of YMT as we know today. YMT finally reached ₩10bil in sales in 2011. But its Silver Electroless-Plating Process method turned out to have several critical shortcomings. As a result, it again had to undergo a difficult time. It soon turned its eye to Gold Electroless-Plating Process, which was technologically more advanced. But Japan's Okuno was dominating this market segment in Korea by then. YMT had a price advantage; however, it wasn't easy to break into this Gold Electroless-Plating Process market segment even in Korea only with cheaper price. So, the company first targeted a niche market in overseas. Its first strategically targeted market was Taiwan. After some time, the company started seeing a fruitful outcome in Taiwan and could gradually attract low-cost Chinese PCB makers as its key clients. During this period, the company developed and launched two key Gold Electroless-Plating Process products: 1. ENIG (Electroless Nickel Immersion Gold) and 2. ENEPIG (Electroless Nickel Electroless Palladium Immersion Gold). ENIG is commonly used in flexible PCB, whose importance is growing very rapidly due to the explosive growth of flexible OLED market.YMT became Korea's first company to successfully develop and launch ENIG. ENEPIG can be considered as an advanced version of ENIG. With ENIG and ENEPIG, the company could again achieve sales growth. The company has the three main chemical products used in various phases of PCB component processing. They are 1. finish plating chemical, 2. copper plating chemical and 3. process chemical. The first one "finish plating chemical" is the one for PCB surface treatment. The above-mentioned ENIG and ENEPIG are the specific products of finish plating chemicals, which account for 65.4% of total sales (on a separate company basis) and 47.4% of total sales on a consolidated basis). Other than this finish plating chemical (for PCB surface treatment), the company also supplies copper plating chemical (9.7% in 2016 on a consolidated basis) to be used for plating nonconducting materials with copper to make them conducting materials and process chemicals (9.3% in 2016) used in cleaning, etching, stripping, developing, recovering, etc. The company began to do surface treatment work by itself. In this regard, the company established a subsidiary called "YPT Co., Ltd." So, YMT develops and supplies chemicals, and its subsidiary YPT does actual surface treatment work. In 2016, YPT's actual PCB surface treatment business accounted for 31.7% of YMT's total consolidated sales.

YMT Co., Ltd. basically manufactures and supplies chemicals used for the surface treatment of various PCBs (printed circuit board). The company was founded in 1999 and is based in Incheon, South Korea. Founder and current CEO Jeon Seong-wook has a bachelor's degree in Metallurgical Engineering and started his career at Houghton Korea as a surface treatment engineer. He had worked there for about 13 years. Houghton Korea is a JV set by the US based Houghton International &amp; Inc. When he started his career at Houghton, Korea's plating chemical industry lagged far behind such power nations as the US, Germany and Japan. So, with the knowledge and know-how he had obtained from Houghton, he decided to take on a huge challenge to catch up the world's leaders in this field, Germany's Atotech $(www.atotech.com), Japan's C Uyemura &amp; Co Ltd (4966 JP) (www.uyemura.com) and Okuno (www.okuno.co.jp) also from Japan. This was how his company was started. He founded YMT in 1999. As many businesses in their early phase, YMT had struggled to build a solid business foundation for about 5 years. In particular, this is a chemical processing business, which usually requires many years of initial product development. The company hadn't had many happy moments until 2005. But a huge opportunity finally came to Jeon and his company in 2005 when the Korean regulators banned the use of lead in PCB. Back then, it was not rare to use lead as an adhesive in PCB plating process. YMT didn't waste this opportunity to break into this market.The company developed and introduced a new plating method for PCB, which didn't use any lead. This was called "Silver Electroless-Plating Process". Samsung Electro Mechanics Co., Ltd. (009150 KS) was impressed by YMT's new method so it gave YMT a supply contract. YMT also got a supply contract from Daeduck Electronics Co (008060 KS) in the same year. This moment was the beginning of YMT as we know today. YMT finally reached ₩10bil in sales in 2011. But its Silver Electroless-Plating Process method turned out to have several critical shortcomings. As a result, it again had to undergo a difficult time. It soon turned its eye to Gold Electroless-Plating Process, which was technologically more advanced. But Japan's Okuno was dominating this market segment in Korea by then. YMT had a price advantage; however, it wasn't easy to break into this Gold Electroless-Plating Process market segment even in Korea only with cheaper price. So, the company first targeted a niche market in overseas. Its first strategically targeted market was Taiwan. After some time, the company started seeing a fruitful outcome in Taiwan and could gradually attract low-cost Chinese PCB makers as its key clients. During this period, the company developed and launched two key Gold Electroless-Plating Process products: 1. ENIG (Electroless Nickel Immersion Gold) and 2. ENEPIG (Electroless Nickel Electroless Palladium Immersion Gold). ENIG is commonly used in flexible PCB, whose importance is growing very rapidly due to the explosive growth of flexible OLED market.YMT became Korea's first company to successfully develop and launch ENIG. ENEPIG can be considered as an advanced version of ENIG. With ENIG and ENEPIG, the company could again achieve sales growth. The company has the three main chemical products used in various phases of PCB component processing. They are 1. finish plating chemical, 2. copper plating chemical and 3. process chemical. The first one "finish plating chemical" is the one for PCB surface treatment. The above-mentioned ENIG and ENEPIG are the specific products of finish plating chemicals, which account for 65.4% of total sales (on a separate company basis) and 47.4% of total sales on a consolidated basis). Other than this finish plating chemical (for PCB surface treatment), the company also supplies copper plating chemical (9.7% in 2016 on a consolidated basis) to be used for plating nonconducting materials with copper to make them conducting materials and process chemicals (9.3% in 2016) used in cleaning, etching, stripping, developing, recovering, etc. The company began to do surface treatment work by itself. In this regard, the company established a subsidiary called "YPT Co., Ltd." So, YMT develops and supplies chemicals, and its subsidiary YPT does actual surface treatment work. In 2016, YPT's actual PCB surface treatment business accounted for 31.7% of YMT's total consolidated sales.

Samsung Electro Mechanics Co, Ltd. (009150 KS)

YMT IPO Summary - PCB Plating Chemical Company's Solid Growth Story

YMT Co. Ltd.

YMT IPO Summary - PCB Plating Chemical Company's Solid Growth Story