February 10, 2006
Information Memorandum
KTurbo Inc.
● Retains breakthrough technologies in high speed turbo machines
- air bearings, high-speed motor & drive, high precision cast impeller
● Oil-Free, high efficient, environment-friendly & compact Blower / Compressor products.
● High application flexibility & wide range of demands for KTurbo’s core technologies
● Prevalent brand product in the industry with numerous & diversified customer base.
Daedeok Innopolis is the largest innovative cluster in Korea
and one of the top tier clusters in the world.
Information Memorandum
Notice to Recipients
Pharos Capital Limited has been retained by KTurbo Inc. (“Company”) to act as its exclusive financial
advisor (“Advisor”) in connection with the capital-raising of the Company.
The information contained herein has been prepared to assist interested parties in making their own
evaluation of the Company and does not purport to be all-inclusive or to contain all of the information that
a prospective investor may desire. While the textual information contained herein is believed to be accurate,
the Advisor has not independently verified any of the information contained herein in connection with the
Summary, and no representation or warranty is made by either the Advisor or Company as to the accuracy,
reliability or completeness of this Summary. In all cases, prospective parties should conduct their own
investigation and analysis of the Company and the data set forth in this Summary.
By accepting this Summary, the recipient acknowledges and agrees that all information contained herein is
of a confidential nature, that the recipient will treat it in a confidential manner and that recipient will not,
directly or indirectly, disclose or permit its agents or affiliates to disclose any of such information except in
accordance with a signed confidentiality agreement which accompanies or preceded this Summary.
Without limiting the generality of the foregoing, the recipient will not reproduce this Summary, in whole or
in part, and will use this Summary solely for purposes of evaluation the recipient’s interest in the capital
raising. Any proposed actions by the recipient will be made in the written proposal.
All communication or inquiries relating to this Summary or its subject matter can be addressed to either the
representative of the Advisor or the representative of the Company listed in the contact information (see
page 6).
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Contents
Page
Notice to recipients
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1.
Executive Summary
1.1
Company at-a-glance
1.2
KTurbo’s Competitive Edges
1.3
Facts & Milestones
1.4
Contact Information
2.
Company overview
2.1
Business Model
2.2
Market Opportunity ------------------------------------------------------------------------------- 11
2.3
Management & Workforce
2.4
Technology Details
2.5
Major Contracts & Intellectual Property
2.6
Investment & Ownership
2.7
Offering & Use of Proceeds
2.8
IPO Outlook
3.
Financial Forecast
3.1
Financial Forecast
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1. Executive Summary
1.1 Company at-a-glance
Established in 1997, KTurbo Inc. is the leader in industrial turbo blowers and air compressors,
using proprietary technologies that allow oil-free, higher energy efficiency, low noise/vibrations,
smaller footprint etc. which are attractive characteristics for various industrial systems.
Especially, KTurbo retains expertise in Air Foil Bearings, High Speed Motors, Sensor-less
Inverter and High Precision Cast Impeller technologies for turbo blower and compressor
productions.
KTurbo’s Turbo Blowers are used in various industrial applications such as
particle air conveyor machinery and aeration systems for industrial facilities such as chemical
productions, food processing, cement production, waste water treatment etc. as pumps and
generators.
The company is currently providing their machinery and systems to high-profile
customers in Korea, China and Japan.
KTurbo’s customers include Samsung Electronics,
Daewoo Engineering, Daesang, Coca Cola Bottling Korea, Lotte Confectionary, GS
Constructions, Samsung Engineering, SK Chemicals, Ministry of Defense (Procurement) and
many more.
It can be said that the KTurbo’s products can be found in most big-name industrial
facilities as well as government organizations (subsidized projects from Ministry of Defense) in
Korea.
KTurbo’s products are especially useful for contaminant-sensitive production facilities
such as food processing plants since the turbo machines do not use any lubricant oils that often
leak, causing problems to the entire system.
Vision
KTurbo aims to become a pioneer of innovative turbo machines, adopting proprietary air
bearings and high-speed motor technologies.
Through this the company will become the
leading end-to-end provider of various industrial turbo machinery, components and systems.
1.2 Competitive Edges
■ Worldwide Technology Leader in Turbo System
With their own in-house developed breakthrough technologies, KTurbo has produced highperformance turbo machinery such as turbo blowers and compressors for industrial applications.
KTurbo’s competitive machinery is a product of a combination of technologies, that is, the Foil
Air Bearing, High-Speed BLDC Motors and Inverters, High Precision Cast Impeller and
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aerodynamics design technologies.
This has enabled the company to come up with the most
efficient turbo blowers and compressors that can outperform conventional blowers such as the
commonly used Roots Blowers and Turbo Blowers, using less power and taking up less space.
For example, in comparison to Roots blowers, KTurbo’s turbo blowers are able to achieve 34%
higher overall efficiency and 40% lower power consumption to produce the same output.
■ Highly Decorated Breakthrough Technologies / High Entrance Barrier
KTurbo’s technological capabilities and their main product, the turbo blower, have received
numerous awards and certifications that show the company’s potentials, such as the Scope of
Quality Approval, High-Quality Certification from the Ministry of Commerce, Industry &
Energy, Presidential Citation, Prime Minister Citation, Presidential Award from the Korea
Technology Competition (New Tech Korea 2001) etc. The core competitive advantage of
KTurbo’s turbo blowers is the fact that it adopts permanent magnet high speed motors &
hydrodynamic air foil bearings.
Coventional turbo machines adopt speed increasing gears and
oil bearings, which cause tremendous noise and oil pollutions.
KTurbo has developed oil-free
and noise-free products which are directly driven by permanent magnet high speed motors and
supported by hydrodynamic air foil bearings.
The concept of air bearings had been in
existence since 1960, and actually, there are two types, hydrostatic and hydrodynamic air foil
bearings.
The hydrostatic air foil bearings that are being used for levitating the spindle shaft to
do precise cutting work require compressed air to levitate the shaft from outside.
KTurbo’s
blowers adopt hydrodynamic air bearings which do not require any compressed air from external
sources.
Adopting hydrodynamic air bearings, the shaft floats itself when it rotates, which
means that the motor does not require any external compressed air and oil-based lubricants.
Despite much effort to develop this technology by companies around the world, only a few
companies (MITI, Capston, Samsung Techwin etc.) had been successful in its development,
including KTurbo.
The fact that the concept of air bearings had been in existence for a long
time and yet only a few companies around world had been successful in developing it shows that
the foil air bearing technology imposes a very high entrance barrier into the market.
As a first
mover in the turbo machinery industry, KTurbo is continuing to research more efficient and
powerful products.
For example, the company is in the final stages (final product testing stage)
of developing 7.0 bar turbo compressors, and as in the case with turbo blowers, this product has
much more attractive characteristics than existing compressors and will encroach upon the
existing market, both domestic and overseas.
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■ Awards, Certifications and Approvals
Awards / Certification /
Issuer
Remarks
Ministry of Commerce,
Turbo blower using BLDC
Industry & Energy
motor
Public Procurement Service
Turbo blower
Approval
High-Quality Certification
High-Quality Product
Certification
Components Specialty
Ministry of Commerce,
Company Certification
Industry & Energy
Small & Medium Business
-
Inno-Biz Company
Administration
New technology
Presidential Citation
-
Prime Minister Citation
-
commercialization
High-quality component
machinery
Ministry of Science &
-
Engineering Award
Technology
-
Presidential Award
New Tech Korea 2001
■ Prevalence of KTurbo in the Market
KTurbo’s numerous high profile customers include Samsung Electronics, Daewoo Engineering,
Daesang, Coca Cola Bottling Korea, Lotte Confectionary, GS Constructions, Samsung
Engineering, SK Chemicals, Ministry of Defense and many more.
Thus, KTurbo has become a
prevalent name in the turbo blower market with its numerous attractive characteristics such as
oil-free, high-energy efficiency, small footprint, low-noise/vibration, easy maintenance, highdurability etc.
It can be safely said that KTurbo’s products can be found in most factories of
Korea’s leading companies, which shows that Kturbo’s products and their technology has been
highly approved by these top-tier customers.
With strong references from top-tier customers
including government institutions such as the Ministry of Defense, as well as prestigious awards
and certifications, the company is beginning to gain even more customers in Korea as well as in
China and Japan.
■ Wide Range of Applications through Versatile Technology
As mentioned above, KTurbo’s turbo blowers are provided to a wide range of customers and the
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products can be used in diverse applications.
Currently, the turbo blower product is used as
cement particle conveying system, waste water and sewage aeration system, air supply system
for paper and fiber factories, food particle conveying system, etc.
Especially, KTurbo’s turbo
blowers are ideal for medical & pharmaceutical factories, electronic factories and food
processing factories.
In these types of facilities, it is essential that the machinery provide the
cleanest air and prevent contamination by oil-lubricating system.
The company’s products are
able to satisfy this need by using the foil air bearing system in their blowers that do not use any
lubricant oils.
These lubricant oils had been a significant problem with conventional Roots
Blowers and Turbo Blowers since they often times leaked and caused contamination of the
entire system.
Since KTurbo’s products do not use any lubricant oils, this problem has been
effectively eliminated.
■ High Growth Potential with Stable Domestic & Overseas Markets
The existing blower market is divided into three segments according to the output (pressure, air
flow delivery) of the machine which is directly related to its physical size/footprint.
The first
segment is the Ring Blower that can produce small-size air flow delivery below 0.3 bar (1 bar is
about 1 Atmosphere pressure).
The second segment is the Roots Blower (Rotary Blower) that
can produce middle-size air flow delivery between 0.3~1.0 bar, and the third segment is the
Turbo Blower that can generally produce large-size air flow delivery between 0.6~1.2 bar.
However, KTurbo’s products are able to cover the conventional Roots Blower & Turbo Blower
range together and at the same time keeping the physical size of the machine to a minimum.
Not only that, but KTurbo also has been able to reduce the actual cost of the machine, by
increasing energy efficiency and its life span, and providing low maintenance costs.
Thus, the
company views the two-segment market space as a single market, into which the company has
already began penetrating and they expect their market share to increase as their products
replace the existing ones.
Thus, it is expected that the company’s revenue growth rate will far
exceed that of the market growth.
With solid references, KTurbo planted seeds in the overseas
market including China and Japan in 2005. The company supplied 20~30 systems on trial
basis to a number of Chinese customers which is over US$ 1 Million currency wise, as well as
Japanese big names.
This will be a major growth driver for the company down the next few
years on top of the domestic sales growth.
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1.2 Facts & Figures
■ Facts
Facts
CEO
Heon-Seok Lee
Foundation
Dec. 8th, 1999
Address
256 Geumho-ri, Buyongmyeon, Cheongwon-gun, Chungbuk, Korea
Paid In Capital
KRW 2,949 Million
No. of Employees
72
Products
Turbo Blower, Turbo Compressor, Impeller, High-Speed Motor, Inverter
Independent Auditors
Shinhan Accounting Corp.
Target Market
Industrial factories / facilities components
■ Milestones
1997. 12.
Established "Power Tech" (Private company)
1998. 10.
Changed corporate name to KTurbo Inc.
2000. 08.
Established Research Center
2001. 02.
Developed 20hP Turbo Blower
2001. 07.
Won Presidential award in “New Tech Korea 2001”
2002. 07. Authorized as an INNO-BIZ company
2003. 06.
Exhibited in ASME Turbo Expo
2003. 09.
Started marketing of Turbo Blowers
2003. 10.
Contracted the agreement for the localization of military elements
(Ministry of National Defense)
2004. 03.
Certified ISO 9001 : 2000
2004. 11.
Certified “Excellent Machinery” (Ministry of Commerce, Industry & Energy)
2005. 01.
Fundraised US$ 10,000,000 by increasing paid-in capital
(Sungshin Cement Co., Ltd invested)
2005. 04.
Selected as the “Excellent Product” (EP) from Public Procurement Service
2005. 10. Won the Prime Minister’s prize for developing the excellent capital goods
2005. 11. Won the Presidential award for commercializing the new technology
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1.3 Contact Information
Pharos Capital Limited
Mr. D.I. Cho
Associate Manager
Tel. +82-2-540-6501
Email. [email protected]
KTurbo
Woo-Jin Jang
CFO / Managing Director
Tel. +82-43-275-7573
Email. [email protected]
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2. Company Overview
KTurbo’s turbo blowers can cover the conventional Roots & Turbo blower market by adopting
state-of-the-art technologies (high speed motor & drive, air foil bearing) which provide clean air
environment, energy savings, and low maintenance costs to customers.
By utilizing the
technical versatility and numerous attractive characteristics of their products, Kturbo has been
able to target the existing blower and compressor markets, seeking to replace the conventional
Roots & Turbo Blowers, and Screw & Turbo Compressors.
KTurbo has completed the line-up
of turbo blowers last year from TB50 to TB300 and KTurbo’s compressors are scheduled to be
introduced into the market this year.
KTurbo has the advantage in encroaching upon the
existing market since 50% of the Roots Blowers and 100% of Turbo Blowers in the domestic
market are provided by imports.
KTurbo retains end-to-end productions of blowers,
compressors and all the constituent components, thus having cost advantages over the imported
products and other domestic competitors.
2.1 Business Model
■ Turbo Blowers
Conventional Roots rotary blowers, which currently occupy most of the blower market, have
serious problems such as high levels of noise and vibration, and frequent oil leakage (lubricant
oil) deteriorating the work environment in the field.
efficiency.
Above all, they have very poor system
KTurbo Blowers employ the hydrodynamic foil air bearings (air-lubricated) and
highly efficient BLDC motors and drivers, which eliminate the complicated gear trains, provide
considerable energy savings without scheduled maintenance, and with very low level of noise.
More than 30% electrical energy savings are found from the end-users, compared to the current
Roots rotary blowers.
KTurbo is seeking to replace the existing blower products in the market
through direct sales to customers.
Since the company retains a wide range of specifications for
the turbo blower product, customers can choose among the models that suits their system needs.
Once installed, KTurbo blower has low-noise (under 75dB), consumes low power, takes up only
a small space in relation to its output size and provide low maintenance costs since the products
are durable and does not need any lubricant oils that need to be periodically replaced and
maintained.
Thus, these advantageous characteristics of KTurbo’s products will attract the
conventional Roots Blower and Turbo Blower users.
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<Figure 1> Turbo Blower
<Table 1> Turbo Blower Specifications
TB40 TB75 TB75 TB100 TB100 TB150 TB150 TB200 TB200 TB200 TB200 TB300 TB300
SPECIFICATION
-0.5S -0.6S -1.5S -0.6S
-0.8S
TYPE
-0.8S
-1.5S -0.72S -1.0S
-1.8S
SINGLE TYPE
-0.6T -0.8T -1.5T
TWIN TYPE
PRESSURE
0.5
0.6
1.5
0.6
0.8
0.8
1.5
0.72
1.0
1.8
0.6
0.8
1.5
34
51
26
70
54
80
51
106
89
56
140
161
101
DELIVERY(bar g)
AIR FLOW
DELIVERY(㎥/min)
SHAFT
40
75
100
150
200
300
32
60
80
120
160
240
POWER(HP)
INPUT
POWER(kW)
INPUT
380 / 440V
VOLTAGE(3PH)
MOTOR
0.95
EFFICIENCY
TYPE OF
AIR FOIL BEARING
BEARING
EXHAUST PIPE
200A
250A 200A 250A 200A
COOLING TYPE
WEIGHT(kg)
250A
200A
400A
300A
AIR COOLED
220
250
300
250
350
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450
550
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■ Turbo Compressors
KTurbo has completed the development of Turbo Compressors and is currently in the product testing stage.
The Turbo Compressor product is an extension of the commercialized turbo blower in terms of technology.
Turbo compressors are different from turbo blowers in that they produce much higher output pressure
(around 7~9 bar) by conducting two stage compressing processes.
As in the case with turbo blowers,
KTurbo’s turbo compressors will replace much larger, expensive and inefficient compressors currently in
use.
<Figure 2> Turbo Compressor
■ Revenue Estimation of Major Products
Units: KRW Million
2006
Turbo Blower
2007
2008
15,000
30,000
60,000
Turbo Compressor
2,000
10,000
50,000
Government Projects
7,000
10,000
15,000
24,000
50,000
125,000
Total
2.2 Market Opportunities
The market outlook for KTurbo, both domestic and overseas, is a very optimistic one.
Not
only is the air bearing technology held by only a handful of players in the worldwide market, but
on top of that, KTurbo has added various advantages in their products, which are currently
attracting a wide range of customers worldwide.
KTurbo’s turbo blowers are able to penetrate
the existing Roots Blower and Turbo Blower markets since KTurbo’s products can cover all of
the output ranges of these products.
Additionally, many domestic companies had relied upon
imported products for the Roots Blower, Turbo Blowers and their components.
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their superior product performances, KTurbo is also able to provide cost competitiveness
through domestic production of the blowers as well as their components such as high-speed
BLDC motors and inverters.
As for compressors, the existing products in the market that can
produce the desired outputs are physically huge and very expensive.
This is due to the fact that
conventional compressors use gear chains to increase operating shaft speed, which means that a
large gear box is required, and since they have mechanical contacts, lubricant oils must be used.
However, KTurbo has been able to produce turbo compressors that are much smaller and less
expensive.
80% of the compressors in the current domestic market is also imported, thus
KTurbo’s turbo compressors will become very attractive to domestic customers for its costcompetitiveness as well as its high performance.
■ Turbo Blowers
The previously segmented Roots Blower & Turbo Blower market can be seen as a single market
in the viewpoint of KTurbo since their products can cover the functions of the existing roots
blower & turbo blower products with lower maintenance costs, higher energy efficiency and
around 1/10 ~ 1/3 of the footprint of the conventional products.
Also, with the government
regulations concerning waste water treatment in production facilities as well as regulations on
noise pollution (both regulations became effective as of August, 2000) the demand for low-noise
waste water aeration blowers has greatly increased in demands.
For this purpose many
companies had used the Roots blowers, but the noise level is still a problem, and these
companies are looking to replace these products with more cost-effective and lower-noise
blowers.
<Table 2> Annual Domestic & Worldwide Market Size
Pressure Delivery
Product
Domestic Market
Worldwide Market
US$ 10 Million
US$ 400 Million
US$ 20 Million
US$ 800 Million
US$ 10 Million
US$ 400 Million
(Horse Power)
Below 0.3 bar
Ring Blower
(1~75 HP)
Roots Blower
0.3 ~1.0 bar
(Rotary Blower)
(10~300 HP)
0.6~1.2 bar
Turbo Blower
(200~600 HP)
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■ Turbo Compressors
In creating the necessary outputs, conventional turbo compressors were huge in physical size,
produced much noise/vibrations, expensive, consumed a great deal of power and was difficult to
maintain.
Like the turbo blower products, this market is also segmented into Reciprocating,
Screw and Turbo compressors.
Again, KTurbo’s turbo compressors are able to cover screw
and conventional turbo markets while maintaining compact size of the products, low-noise, costcompetitiveness, easy maintenance etc.
Thus, KTurbo will be able to penetrate into the major
screw and turbo compressor market.
<Table 3> Annual Domestic & Worldwide Market Size
Pressure Delivery
Product
Domestic Market
Worldwide Market
US$ 10 Million
US$ 1,000 Million
US$ 80 Million
US$ 8,000 Million
US$ 20 Million
US$ 2,000 Million
(Horse Power)
Reciprocating
1~30 bar
Compressor
(0.5~600 HP)
Screw
5~13 bar
Compressor
(5~ 300 HP)
Turbo
7~13 bar
Compressor
(above 300 HP)
<Table 4> Blower & Compressor Competitors
Product
Ring Blower
Roots Blower
Competitors
Hwang Hae Electric, Daeha Machinery
KFM, Naewe Machinery
(Rotary Blower)
Turbo Blower
Reciprocating
Jaewang Turbo Tech (imports from Finland), Seowon (imports from Japan)
Hanshin, Kwangshin, Uchang, Kohens
Compressor
Screw
Hanshin, Kwangshin, Uchang, Airplus
Compressor
Turbo
Samsung Techwin, ICK, Seah
Compressor
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2.3 Management & Workforces
Heon-Seok Lee, President and CEO
Specialties
Organization
KTurbo
-Administrations
Main Achievement
-President and CEO
&
PowerTech
-CEO
Management
-Aerodynamic design of centrifugal compressors
-Rotor Design
Samsung Techwin
-Chiller compressor for missile engine
-Aerodynamics Design
Seoul National University
-Aerodynamic Analysis
MA
Woo-Jin Jang, CFO
Specialties
Organization
KTurbo
Main Achievement
-CFO
-Planning
Cyberlink
-Funding
-Management
-Management
-Financing
-M&A / Management consulting
-Planning
KTB Network
-Planning
KAIST
MA
-Mechanical Engineering
-Fatigure Fracture
Min-Seok Lee, COO
Specialties
Organization
KTurbo
Main Achievement
COO
-Planning
-Management
Daewoo
-Management
-Sales
-Apartment construction project manager
-Planning
Hong-Ik Univ.
-Civil Engineering
MA
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Seong-Bum Seo, Information Team Manager
Specialties
Organization
KTurbo
Main Achievement
Information Team Manager
-Advertisement consulting
-Management
Phoenix Communications
-Planning
-Advertisement
-Chief manager
consulting
-Advertisement consulting
-Japanese
-Management
-Planning
Oricom
-Planning
-Management
-Chief manager
Hankuk University of
Foreign Studies
-Japanese
MA
Sam-Ho Im, Electric & Electron Team Manager
Specialties
Organization
KTurbo
Main Achievement
Electric & Electron Team Manager
-Senior researcher
-Electric Control
Samsung Techwin
-Control System Design
-Control system design for centrifugal compressors
in gas turbines
Hanyang Univ.
-Electric Control
BS
2.4 Technology Details
■ Air Foil Bearings
In developing and commercializing lubricant-free and noise-free turbo blowers and compressors,
the air foil bearing technology played a key role.
Air bearings have advantages over
conventional ball or mechanical bearings in that the shaft does not have any physical contacts,
which means that no lubricant oils are required, there are no mechanical energy losses and there
are no abrasions caused by physical contacts while the shaft is in motion.
The shaft of the
motor is suspended in air since the shape of the shaft transforms kinetic energy into pressure
energy while the shaft is spinning.
This extraordinary design eliminates the need to pump air
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into the machinery from external air pumps since it can self-levitate.
This increases energy
efficiency.
■ Impeller Design Capabilities
The impeller of centrifugal turbo machines is a rotating disk with blades.
is called the rotor.
For the axial and radial type, it
The design of impellers is very important for the overall performance of the turbo
machine.
For the rotating impeller to intake gas by the axial direction, the blade angle at the entrance should be
inclined along the axis.
Fluids or gases inside an impeller moves from axial direction to the radial
direction according to the velocity component of rotating element. Increasing radial position of flowing
fluid or gas accelerate the main velocity (blade speed).
As a result, the fluid or gas obtains energy
(pressure and velocity) form the rotating impeller.
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<Table 5> Blower Product Comparison
Category
Roots Blower
Low-Speed
High-Speed
Electric Motor
Electric Motor
Ring Blower
KTurbo
Hwang Hae
HV Turbo,
Electric
Kawasaki
5-300 HP
1-75 HP
50%
Leading
KFM Blower
HST
KTurbo
100-2000 HP
100-300 HP
40 – 300 HP
50%
80%
75%
80%
85%
85%
85%
80%
95%
42%
42%
68%
60%
76%
Lubricant
yes
yes
yes
no
No
Maintenance
All parts
All parts
All parts
Intake filter
Intake filter
Price
KRW 20 Mil
KRW 20 Mil
KRW 50 Mil
KRW 60 Mil
KRW 30 Mil
Life cycle
5 yrs
2 yrs
15 yrs
20 yrs
20 yrs
Size
Large
Large
Large
Medium
Small
Noise
95-110 dB
90 dB
85-100 dB
75 dB
75 dB
Power Use
100
100
70
70
60
no
no
yes
yes
Yes
Product
Output
Compression
Efficiency
Motor
Efficiency
Overall
Efficiency
Partial
Impedance
2.5 Major Contracts and Intellectual Properties
■ Major Contracts (2006)
Note
Partner
Date of contract
Haesung Constructions
Jan 6, 2006
Uniens
Jan 6, 2006
Turbo blowers
PMG
Jan 10, 2006
Turbo blowers
Dongil Paper
Jan 13, 2006
Turbo blowers
Ministry of Defense
Jan 10, 2006
Generators
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Namwon
Jan 12, 2006
Turbo blowers
The total amount of contracts in January alone is KRW 1,897 Million.
■ Intellectual Properties
Item
Contents
Status
Patent
Supercharger for combustible engines
Registered
Utility Model
Bearing structure for air levitation of shaft of turbo machines
Registered
Patent
Small turbo compressor
Registered
Patent
Gas turbine engine
Applied
Utility Model
Radial foil bearing
Applied
Patent
Impeller
Applied
Utility Model
Strut disk
Applied
Utility Model
Radial bearing housing
Applied
Utility Model
High-speed motor shaft
Applied
2.6 Investments and Ownership
■ Shareholder Breakdown
Shareholder Name
Investment Amount
Heon-Seok Lee
781,191,200
7,811,912
26.49%
Sungshin Cement
777,777,800
7,777,778
26.37%
Tae-Hyun Kim
333,333,300
3,333,333
11.30%
Sung-Kwang Kim
146,244,600
1,462,446
4.96%
Young-Bae Kim
47,880,500
478,805
1.62%
Jae-Hong Ahn
33,122,400
331,224
1.12%
Others (Individuals)
829,728,100
29,161,555
28.13%
Total
2,949,277,900
29,492,779
100.00%
Strictly Confidential
No. of
Shares
Ownership
18
Information Memorandum
2.7 Offering and Use of Proceeds
■ Offering
Type of Financing Instrument
Equity or Bond
Value of Offering shares
US$ 10,000,000
Price
Negotiation
Terms of Offering
The offering commences on Feb. 10, 2006 and continues until
August, 2006 unless otherwise extended by the Company.
Withdrawal of
The Company may withdraw or cancel this Offering at any time
Offering
without notice, and may reject offers for shares for any reason.
■ Use of Proceeds
The principal purposes of this offering are to raise the expenses for marketing, developing various new
products and working capital, extend the overseas channels that can be helpful to marketing and increase
KTurbo’s visibility in the overseas financial marketplace.
The company intends to use the proceeds from
this offering as follows:
i.
approximately US$ 5 million for production factory
ii.
approximately US$ 5 million for working capital
2. 8 Exit Strategy
■ IPO Outlook
KTurbo is expected to be able to carry out Initial Public Offering at latest by the first half of 2008 in the
Korean stock exchange (KOSDAQ) or NASDAQ after it meet the criteria for IPO in 2007.
At that time
venture capitalists and investors will be able to realize a great deal of value from their investment.
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Information Memorandum
3. Valuation
3.1 Financial Forecast
(KRW: Million)
Sales
2004
2005
2006E
2007E
2008E
10,428
11,900
24,000
50,000
125,000
Gross Profit
6,880
4,700
13,000
27,000
67,500
Operating Profit
4,434
900
5,000
11,000
35,500
Net Profit
3,944
900
4,300
9,600
31,100
*Note: The early launching of new products in 2005 caused some product recalls the need for
product maintenance services and technical support for various customers and this had
occupied most of the company’s resources for a duration of 3~4 months.
This consequently
allowed the company to operate only for 8 months and created extra expenses for the recall.
This was the main reason for the flat sales and the drop in profit in 2005.
Also, since the
company turned to positive profits in 2004, the income tax was also applied in 2005, and this
is another reason for the profit decline in 2005.
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