[Click eStock] "CS Bearing, Vietnam Expansion as Growth Engine"

Completion of Certification Process for Major Bearing Models for GE in H1
Expecting Mid- to Long-Term Benefits from Green New Deal Policy

[Asia Economy Reporter Gong Byung-sun] An analysis has emerged that the growth momentum of CS Bearing will be fully activated depending on the success of its expansion into Vietnam. It is interpreted that if the certification process for the production of major bearing models in Vietnam is completed in the first half of the year, full-scale mass production of key models will be possible. Accordingly, Daishin Securities maintained a target stock price of 44,000 KRW and a 'Buy' investment rating for CS Bearing.

CS Bearing, a manufacturer of bearings for wind tower turbines, is attracting attention regarding the success of its entry into the Vietnamese market. Last September, CS Bearing focused on the Vietnamese market by issuing convertible bonds and bonds with warrants worth 20 billion KRW to invest in facilities for its Vietnamese subsidiary. CS Bearing plans to complete the production certification process for major bearing models for General Electric (GE) at its Vietnamese subsidiary by April. After certification, full-scale mass production of key models will be possible. In particular, CS Bearing is expected to expand its market share as it holds high price competitiveness among GE-related companies.

In the second half of the year, new sales from offshore wind power and the operating rate of the Vietnamese subsidiary are expected to increase. The operating rate, which remained at 60-70% in the fourth quarter of last year, is planned to be raised to 100%. Bearings for Siemens will be produced at the Vietnamese subsidiary starting in the second half of the year. Onshore bearings and 8-megawatt offshore wind power bearings are scheduled to be supplied sequentially in the third quarter, and 10-megawatt offshore wind power bearings in the fourth quarter. Han Kyung-rae, a researcher at Daishin Securities, said, “The Vietnamese subsidiary will maximize its production capacity from the second half of the year,” adding, “Operating profit margin is expected to improve by 2.1 percentage points from the previous year to 11.3% this year.”

Long-term benefits are also anticipated in line with the Green New Deal trend. Previously, CS Bearing was considered a beneficiary stock of U.S. President Joe Biden’s election. Additionally, last July, President Moon Jae-in announced the ‘Korean-style Green New Deal’ and declared the goal of becoming one of the world’s top five offshore wind power countries by 2030. Accordingly, the government decided to promote offshore wind power projects, and CS Bearing is expected to participate.

Reflecting this, Daishin Securities maintained CS Bearing’s stock price target at 44,000 KRW. The researcher explained, “The target stock price was calculated by applying a price-earnings ratio (PER) of 28 times to the expected earnings per share (EPS) of 1,576 KRW for next year.”

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