[Click eStock] "Doosan Heavy Industries, Liquidity Risk Concerns Due to Debt Burden"

[Asia Economy Reporter Minji Lee] Daishin Securities on the 12th issued a market perform investment opinion on Doosan Heavy Industries & Construction, stating that although operations are not halted, the poor business conditions may exacerbate issues with debt repayment.

Doosan Heavy Industries & Construction's stock price plunged about 21% compared to the previous trading day following news regarding a review of a temporary shutdown. In response, the company dismissed concerns, stating that there is no factory operation or business suspension, and that the matter concerns limited unpaid leave for idle personnel without affecting operations.

Researcher Dongheon Lee of Daishin Securities explained, “The reason for this decision is that the previously ongoing voluntary retirement program fell short of its target level due to the impact of COVID-19, necessitating additional labor cost reductions,” adding, “The company will pay idle personnel an average of 70% of their wages to take unpaid leave for a certain period.”

The main concern is that if normal operations are disrupted, liquidity risks could arise due to difficulties in repaying borrowings. Currently, on a separate basis, bonds amount to 1.5 trillion KRW, of which 600.6 billion KRW in foreign currency public bonds maturing on the 27th of next month are guaranteed by the Export-Import Bank and are expected to be converted into loans. On May 4th, a put option can be exercised on 499.8 billion KRW of bonds with warrants, and except for 92 billion KRW of Doosan shares held by the major shareholder, most of the remaining 408 billion KRW is expected to be claimed for repayment.

Researcher Lee said, “The company will respond through approximately 470 billion KRW in cash equivalents, project settlement payments, sales of idle assets, and additional fundraising,” and added, “The company’s order backlog is about 14 trillion KRW, so the pace of performance and business condition improvements needs to be monitored.”

This content was produced with the assistance of AI translation services.