1. KCT’s H1 2025 Performance: What Happened?

KCT reported revenue of KRW 6.767 billion and operating profit of KRW 1.091 billion for the first half of 2025. While revenue surged by 63.2% year-over-year, the increase in operating profit did not match the revenue growth rate.

2. The Driver Behind Explosive Revenue Growth: Why?

The primary drivers of the revenue surge were successful large-scale contracts with major clients such as Donghaeng Lottery, Sports Toto Korea, Shinhan Bank, and Woori Bank. KCT is also focusing on securing future growth engines through increased R&D investment (6.42% of revenue).

3. Declining Profitability and Financial Risks: So What?

  • Declining Profitability: Increased cost of goods sold (COGS) and selling, general, and administrative expenses (SG&A), coupled with a high proportion of outsourced production, have led to a decline in profitability.
  • Financial Soundness Concerns: KRW 12 billion in long-term debt could exacerbate interest expense burdens if interest rates rise. The debt-to-equity ratio is also on an upward trend (96.71% in 2022 to 111.24% in 2024).
  • Macroeconomic Uncertainty: Volatility in interest rates and exchange rates, along with the possibility of a global economic slowdown, could impact KCT’s future performance.

4. Action Plan for Investors

KCT presents both positive aspects, such as revenue growth, and negative aspects, such as profitability and financial soundness. Therefore, investors need to carefully consider the following factors when making investment decisions.

  • Profitability improvement status and strategy
  • Financial structure stabilization plan
  • Strategies to cope with macroeconomic changes
  • H2 earnings announcements and business reports

It is advisable to continuously monitor KCT’s fundamental improvements and consider a ‘wait-and-see’ or ‘invest after confirming performance improvement’ strategy.