SFA Engineering Corporation is accelerating its shift to an "AI autonomous manufacturing Robotics" corporations, overcoming the shock of a slowdown in the secondary battery industry and the bankruptcy of a key client.
However, the stock-collateral loan structure of top shareholder DY Holdings is a factor to watch for corporate governance. While a stock-collateral loan is a funding method for the largest shareholder, a drop in the share price can raise the collateral ratio and trigger demands for additional collateral or repayment. That could affect the holding company's liquidity management and the stability of its governance structure.
◇ Reconfiguring the portfolio after the battery shock… expanding into autonomous manufacturing, semiconductors, and subsea cables
SFA posted an operating loss of 48.4 billion won on a consolidation basis in 2024 due to the fallout from the bankruptcy of European battery maker Northvolt, but returned to the black last year with 85.9 billion won in operating profit.
As the secondary battery market slowed, related revenue fell from 484.3 billion won in 2024 to 305.3 billion won in 2025, while the RMH (distribution and other manufacturing) segment grew rapidly. The segment's backlog jumped about fourfold over the same period, from 72.7 billion won to 292.3 billion won.
SFA is moving away from being a simple equipment supplier to become an "autonomous manufacturing platform corporations." The goal is to build a "level 5 fully autonomous manufacturing" system in which factories operate on their own without human intervention by 2030.
For now, it is raising the level of automation by combining robot arms with automated guided vehicles (AGVs) and autonomous mobile robots (AMRs). In the long term, it plans to pursue the development of Humanoid Robot.
The company said, "We are developing solutions that include self-recovery and self-optimization functions and plan to apply some technologies to existing equipment as early as next year."
It is also strengthening its semiconductor equipment business. It is developing 3D wiring formation equipment for advanced packaging, a nondestructive CT inspector for flip-chip bonding, and wafer-level package inspection equipment, and plans to commercialize them sequentially starting in 2027. The AI-based HBM nondestructive inspection equipment under a national project is also expected to be commercialized in 2028.
It is preparing to enter the subsea cable manufacturing equipment market in step with the expansion of AI data centers. Based on its experience supplying related equipment, the company expects to secure more than 100 billion won in new orders annually going forward.
The company said, "We secured orders worth about 290 billion won last year, of which subsea cable equipment accounted for about 120 billion won," and added, "This year, we expect to expand orders mainly in North America and Southeast Asia."
◇ 119 billion won stock-backed loans and holding-company liquidity… governance and accounting variables coexist
There are variables to review on the financial and accounting side, including the largest shareholder's stock-collateral loan structure and the holding company's liquidity conditions, the share of revenue recognized on a percentage-of-completion basis, and potential goodwill impairment.
DY Holdings, of which Vice Chairman Won Jin holds 100% equity, currently operates about 119 billion won in stock-collateral loans secured by SFA shares. About 28.18% of its holdings are pledged as collateral to financial institutions. Vice Chairman Won is the second son of Won Jong-mok, founder of Tongyang Elevator (now DY Holdings), and acquired SFA in 2008.
Compared with owner families of major domestic corporate groups, the collateralization ratio is not high. According to a study by corporate analysis institute Leaders Index, an average of 44.8% of the shares held by owner families of the top 50 groups in Korea are provided as collateral.
However, given the nature of an investment-company-type holding structure, fluctuations in the value of held equity can have a relatively large impact on financial stability. DY Holdings has about 94% (513 billion won) of its total assets in subsidiaries' equity, and its proportion of short-term borrowings (94.2 billion won) is high relative to current assets (2.7 billion won).
SFA's earnings structure is also affected by certain accounting estimates. Of last year's 1.6309 trillion won in revenue on a consolidation basis, about 51% was recognized using the percentage-of-completion method. Given its focus on long-term projects, earnings volatility can increase depending on progress ratios and cost estimates.
Another variable is about 118.9 billion won in goodwill arising from past mergers and acquisitions. In some subsidiaries, about 10.9 billion won in impairment losses has already been recognized. If the slowdown in investment cycles for semiconductors and secondary batteries continues, additional impairments are also being discussed.