Kyobo Securities has lowered its target price for Doosan to 1.2 million won while maintaining a "buy" rating. The analysis indicates that while the overall market outlook remains positive due to increasing demand for artificial intelligence (AI), the investment appeal may be overshadowed by other priorities.
Park Hee-cheol, a researcher at Kyobo Securities, stated on November 10, "The CCL (Copper Clad Laminate) business operated by Doosan Electronics is maintaining a positive market outlook alongside AI demand. However, in the context of a rebound in the tech sector, its investment priority may decline." He added, "The characteristics of the current IT value chain show a supplier's advantage, with key factors being actual allocations for long-term supply and strong pricing power. Doosan Electronics meets all these criteria based on its strong position in the industry."
Doosan's consolidated revenue for the third quarter of this year reached 5.4269 trillion won, a 21.9% increase compared to the same period last year, while operating profit surged 98.6% to 459.4 billion won.
The electronics business group's revenue for the third quarter was 802 billion won, up 82.4% year-on-year, with operating profit rising 126.6% to 235.4 billion won. Although the profit margin decreased compared to the previous quarter due to exchange rate effects, assuming the same exchange rate impact, the results exceeded the target by over 30%.
Park noted, "The growth trend in revenue and operating profit through high-margin products is being maintained, and the ability to manage inventory levels of raw materials, which could face supply disruptions, is limited to 3 to 6 months, minimizing the impact of external variables."
However, the target price has been lowered to 1.2 million won while maintaining a "buy" recommendation. The annual revenue forecast for Doosan's electronics business group this year is set at 2.9879 trillion won, with an operating profit of 888.2 billion won, reflecting increases of 59.3% and 83.2%, respectively, compared to the previous year.
Park added, "While the actual demand slowdown and intensified competition among strategic clients are limited, the pace of margin improvement is slow. A meaningful additional improvement in margins, based on a solid industry position, could trigger an outperforming performance when the sector rebounds."
* This article has been translated by AI.
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