S. Korea’s Kencoa Aerospace expands space business in U.S. with new capital

Written by Brian Berger Wednesday, 03 March 2021 19:08

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SEOUL, South Korea — Kencoa Aerospace Corp., a South Korean aircraft assembler and parts supplier that has NASA, SpaceX and Blue Origin as clients, is planning to expand its U.S. parts manufacturing plant in Georgia.

The company raised 30 billion won ($26.6 million) in February by issuing convertible bonds to domestic institutional investors and will use a third of the newly raised fund for the expansion of its Eastman, Georgia-based affiliate, Kencoa Aerospace LLC, said a Kencoa investor relations manager.

It has another affiliate, Los Angeles-based California Metal & Supply Inc., producing special materials and alloys for space rockets, engines and other products. Kencoa established its U.S. footholds through a pair of 2017 acquisitions.

“We see an increasing demand for our products with the advent of New Space,” the manager said. “We expect an average 50 percent annual growth of our space business throughout 2025.”

While the company’s 2020 sales fell nearly 32 percent to 31.64 billion won year-over-year due to the pandemic wreaking havoc on its aircraft assembly and maintenance business, the sales of its space business showed “robust” growth, said the manager, though he refused to give details, citing confidential nature of the data.

On the back of a series of lucrative deals with U.S. space companies, Kencoa’s stock price on South Korea’s small-cap focused KOSDAQ market rose 226 percent from January, to close at 17,300 won as of March 3.

Kencoa made headlines in late February after announcing its first rocket engine supply deal with Blue Origin. Under the contract, Kencoa Aerospace LLC will produce parts for Blue Origin’s BE-4 rocket engines, according to the manager.

“We spent two years preparing to make it happen,” he said, adding California Metal & Supply Inc. was included in the pool of Blue Origin’s suppliers in 2018.

Kencoa is also a contributor to NASA’s Artemis Program. In January, the company clinched a $1.3 million supply deal with NASA contractor Boeing, under which Kencoa’s two U.S. affiliates are set to work together to produce intertank, engine section and slosh baffles for the Space Launch System (SLS) heavy-lift rocket that will launch an uncrewed Orion capsule on the Artemis 1 mission. The firm’s parts will also be used for SLS’s Artemis 2 and Artemis 3 missions, according to the manager.

“We’ve been in NASA’s supply chain for over 10 years, supplying titanium, steel and nickel alloys,” he said. “Our proven track records have paved the way to make a good deal with emerging space companies in the United States.”

Kencoa won a vendor code from SpaceX in 2018, with which it has supplied special materials to SpaceX, he said.

“We are making an impressive stride in the world’s biggest space market with competitive products,” Kencoa CEO Lee Min-kyu in a January statement. “Kencoa is the only company in Korea that has a business relationship with leading space business brands.”

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