Kolon GLOBAL said on the 30th it plans to complete merger procedures on the 1st with "MOD," a golf, resort and hotel specialist, and "LSI," an asset management specialist.
With this merger, Kolon GLOBAL will lay the groundwork for sustainable growth, including diversification of its business portfolio, expansion of the value chain, and improvement of its financial structure.
Kolon GLOBAL will be able to hold a diverse business portfolio by adding operating capabilities in hotels, resorts, golf courses and leisure owned by MOD and LSI to its existing focus on development and construction.
Kolon GLOBAL will strengthen its role as a comprehensive energy business operator equipped with operating capabilities, not limited to the development and construction of onshore wind power in Korea. In environmental businesses such as water treatment and waste disposal, it plans to maximize stability and efficiency through capability integration and total service offerings. Kolon GLOBAL will expand a virtuous-cycle value chain that connects development, construction and operation to leap forward as a "real estate, environment, energy and leisure total provider."
LSI and MOD have been steadily generating stable revenue. Last year, LSI and MOD posted revenue of 148.9 billion won and 30.5 billion won, respectively. On a simple combined basis, the two companies' annual revenue last year equals about 6.2% of Kolon GLOBAL's consolidation-based revenue. LSI's average operating margin over the past three years is about 5%, and MOD's reaches about 13%.
Kolon GLOBAL expects it can expand stable operating revenue based on the numerous leisure operating businesses held by LSI and MOD. Kolon GLOBAL has set a goal to secure an additional 85 billion won in operating revenue, including 50 billion won in onshore and offshore wind power dividends after 2030 and 21 billion won from hotel resorts and golf courses. That is about 37% of total operating profit. Kolon GLOBAL plans to achieve 5.4 trillion won in revenue and 230 billion won in operating profit in 2030.
Kolon GLOBAL plans to secure stable operating revenue in areas such as leisure and focus on fostering future growth engines. Kolon GLOBAL will push in stages through 2030 to expand onshore wind and repowering businesses, strengthen offshore wind, and add hydrogen production from wind power.
Kolon GLOBAL is operating a total of 182 MW in seven onshore wind power projects nationwide, including Taebaek Gadeoksan phases 1 and 2 (64.2 MW) and Gyeongju phases 1 and 2 (37.5 MW). Five projects, including Yeonggwang Yeongbaek (54 MW) and Samcheok Dogye (50 MW), are under construction or preparing to break ground. Kolon GLOBAL is expanding its onshore and offshore wind pipeline by promoting the development of more than 20 projects in major regions nationwide.
In the wind power institutional sector, it is pushing business advancement beyond existing construction and operation. In fact, Kolon GLOBAL last year signed Korea's first power purchase agreement (PPA) with SKE&S and ILJIN to supply 37 GWh of renewable energy annually for 20 years. It also launched an onshore wind development fund, expanding the base for investment in new and renewable energy.
Kolon GLOBAL is accelerating into offshore wind power based on the know-how it has accumulated in power generation business at onshore wind farms and its construction experience in sea bridges. Kolon GLOBAL obtained approval in 2022 from the Ministry of Trade, Industry and Energy for the 400 MW "Wando Jang Bogo offshore wind power project," completed an environmental impact assessment this year, and is proceeding step by step with design and permitting.
Kolon GLOBAL plans to accelerate onshore and offshore wind power projects by actively participating in private and public tenders, using the Wando offshore wind project as a springboard. In the long term, it plans to expand into areas such as green hydrogen production linked to wind power.
The nonresidential institutional sector is also expected to be one pillar of Kolon GLOBAL's growth drivers. Last year, Kolon GLOBAL won more than 2.3 trillion won in the nonresidential institutional sector alone, including Korean Air's new engine maintenance plant, Merck's bio facility construction, and the Jeongeup biomass power plant project. New orders in the nonresidential institutional sector, which were about 800 billion won in 2021, rose quickly to 1.1 trillion won in 2022, 1.6 trillion won in 2023, and 2.3 trillion won last year.
Last year, Kolon GLOBAL filled more than half of its total orders with nonresidential projects and posted a record-high order volume of about 4.2 trillion won.
This year as well, Kolon GLOBAL has continued to post order wins in the nonresidential institutional sector, such as Samsung Electronics' Pyeongtaek discharged water temperature reduction facility and Tokyo Electron Korea's research facility, expanding its order backlog to about 13 trillion won and securing more than five years of revenue.
A Kolon GLOBAL official said, "This merger will be an opportunity not merely to expand in size, but to overcome construction market volatility and transition into a sustainable comprehensive energy operator," adding, "We will establish a long-term growth virtuous-cycle structure and continue sustainable growth based on a business portfolio that covers the full life cycle of real estate assets from development to operation."