ITOXI, a KOSDAQ-listed corporation in the domestic game distribution and publishing industry, is supplying pickup trucks to Ukraine. The company promoted that it secured a contract related to the reconstruction project in Ukraine, but there are concerns about whether this will lead to significant achievements.
ITOXI is a KOSDAQ-listed corporation that provided customer service for the popular game 'Anipang' over 10 years ago. Naturally, it cannot manufacture vehicles directly. The plan is to buy trucks from completed vehicle manufacturers and sell them in Ukraine, but it is estimated that the profit margin will be slim due to the nature of intermediary trade.
On the 10th, ITOXI announced that it signed an export contract worth 4.7 billion won with Ukraine's SKS Group (Spec-Com-Service LLC) for pickup trucks. The pickup truck is characterized by its ability to drive safely on severely damaged roads due to war and other factors. The size of this contract accounts for 21% of the projected revenue for 2023, which is not insignificant. ITOXI explained that the pickup trucks being exported will be delivered to the Korean National Police Agency through SKS Group.
Some point out that it is unclear why the Korean National Police Agency in Ukraine is sourcing from a gaming company rather than a vehicle manufacturer, especially from such a distant country.
In relation to this, the company emphasized that it met the condition of supplying 150 units by the end of June, which enabled it to sign the supply contract. A related tender was issued in January, and ITOXI was able to fulfill the requirements and secure the order. An ITOXI representative noted, 'SKS Group is the company that supplies the most to public institutions in Ukraine,' adding, 'The acceleration in production by KG Mobility allowed us to secure the contract.'
As mentioned by ITOXI, the entity manufacturing the pickup trucks is KG Mobility. ITOXI will export the Musso Grand produced by KG Mobility directly to SKS Group, thus capturing the price difference.
ITOXI plans to complete the delivery by June 12. The company received an upfront payment of 30% on the 7th of this month and will obtain the remaining balance within 10 days after notifying that the vehicles are ready for dispatch.
Until now, ITOXI has consistently identified itself as a corporation related to Ukraine. Last year, the stock price, which started at 1,040 won, climbed to 2,450 won amid the reconstruction momentum in Ukraine. ITOXI continued to supply materials until the stock price surpassed 2,000 won.
On March 14 last year, ITOXI announced that it signed a memorandum of understanding (MOU) with the Ukrainian Ministry of Defense Procurement Agency to supply pickup trucks made in Korea. Five days later, it signed another MOU in Kyiv with the German chemical company Harmotech Group to resume production at OPP (Odesa Port Plant), Ukraine's largest urea and ammonia production facility.
As of now, ITOXI's export performance is weak. As of the third quarter of last year, it exported non-game-related products for a total of 264 million won. In 2023, when it began to emphasize its relevance to Ukraine, this amount was zero. For game and platform-related products, it exported 56 million won in the first to third quarters of 2023 and 195 million won in the first to third quarters of 2024. This level amounts to about 1% of the total revenue when domestic sales are included.
Experts have also suggested that the scale of related businesses may not be large. This is mainly because most areas for reconstruction, such as Donetsk, Luhansk, and Zaporizhzhia, are under Russian occupation.
If Russia retains the occupied territories, the scale of reconstruction in Ukraine is bound to be smaller than previously estimated. This is also why analyses suggest that Korean corporations operating in Russia could benefit from the reconstruction.
Yang Hyung-mo, a researcher at DS Investment & Securities, stated, 'It is likely that Russia and China will undertake the reconstruction in the occupied areas,' adding, 'The total annual input amount for all regions in Ukraine will be only about $40 billion to $50 billion.'