이 기사는 2021년 08월 04일 08:05 thebell 에 표출된 기사입니다.

South Korea’s second largest cable maker Taihan Electric Wire is poised to significantly increase its capital expenditure in the second half of this year as it accelerates expansion into new businesses after being acquired by Hoban E&C.

Taihan Electric Wire will secure land to build a undersea cable plant later this year, the company said on Monday. The process has been a bit delayed from the original schedule as the company changed hands.

Construction firm Hoban E&C earlier this year acquired a majority stake in the company from IMM Private Equity. The cable producer is stepping up investment in new growth opportunities after the ownership change.

Apart from its undersea cable plant, Taihan Electric Wire is also expected to speed up efforts to expand its fiber optic cable business. It established a fiber optic cable manufacturing joint venture in Kuwait in 2019, but progress has been slow due to the impact of the Covid-19 pandemic that broke out last year.

The company projected a sharp increase in capital expenditure in the second half of this year as a result of rising investment spending.

“We expect to show tangible results of our efforts to secure future growth drivers and enhance competitiveness later this year,” an official at Taihan Electric Wire said, but adding that it is difficult to forecast the amount of capital expenditure for now.

LS Cable & System, the country’s largest cable maker, recently announced a 185.9 billion won ($161.7 million) plan for its new subsea cable plant. The bulk of the amount is expected to be spent on building a 172-meter high vertical continuous vulcanization (VCV) line.

Taihan Electric Wire, however, already has a VCV line at its production facility in Dangjin, South Chungcheong Province, so it will likely need less money. Still, it is expected to cost tens of billions of won to purchase land for a new plant.

The company’s capital expenditure has declined for the past four years, from 21.4 billion won in 2017 to 7.5 billion won in 2020. This compares with rival LS Cable & System, which invested 163.4 billion won in capital expenditure last year.

Cash flow is expected to substantially improve in the second half given the company’s record order book. Orders on hand reached 43,000 metric tons (excluding overseas subsidiaries) at the end of June this year, up more than 43% from the end of 2020 and about 90% above the six-year average.

Taihan Electric Wire swung to an operating loss of 1.4 billion won in the April to June quarter on a non-consolidated basis. But this was due in large part to temporary expenses related to post-acquisition integration, the company explained, adding that earnings will recover in the second half of the year. (Reporting by Hye-ran Kim)