Daelim Industrial: Difficult to Find Growth Potential but Stock Also Extremely Undervalued

[Asia Economy Reporter Park Jihwan] Meritz Securities analyzed Daelim Industrial on the 3rd, stating that it is difficult to find future growth potential, but the current stock price is also at an extremely low level. Accordingly, the investment opinion 'Buy' is maintained, but the target price was lowered by 14.3% from 140,000 KRW to 120,000 KRW.

Researcher Park Hyungryeol of Meritz Securities said, "The housing pre-sale volume, which serves as a leading indicator, has stagnated at levels of 15,000 units in 2018, 20,000 units in 2019, and 21,000 units in 2020," adding, "Although plant orders are increasing, they are expected to stagnate at around 1.5 trillion KRW, and operating profit is also expected to maintain the 1 trillion KRW recorded last year."

However, even reflecting a discount due to zero growth, the extremely low stock price is considered an upward momentum. With an increase in net cash and a low proportion of overseas plants, it is also showing the most stable performance within the industry.

Researcher Park Hyungryeol explained, "Operating profit is expected to be around 1 trillion KRW this year, slightly decreasing compared to 2019, but this is due to the impact of one-time gains last year (reversal in the housing sector and effects from self-operated projects)."

He added, "There is also a possibility of increased profit depending on whether capital gains from the sale of the Seoul Forest office building are recognized in the second half of the year," and "Considering this year's operating cash flow and the 600 billion KRW from the office building sale, the expansion of net cash is expected to accelerate."

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