[Click eStock] "Doosan Bobcat Directly Benefits from US Infrastructure Investment"

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[Asia Economy Reporter Gong Byung-sun] Doosan Bobcat, which showed a rapid recovery in the first quarter of this year, is expected to benefit from U.S. infrastructure investment. It appears to be positively influenced by U.S. President Joe Biden's stimulus plan.

On the 27th, Daishin Securities raised Doosan Bobcat's target stock price from the previous 43,000 KRW to 50,000 KRW. The investment opinion was maintained as 'Buy.' The target price was raised by revising the annual earnings per share (EPS) for this year from 2,798 KRW to 3,049 KRW and increasing the applied multiple from 15.3 times to 16.4 times.

In the first quarter of this year, Doosan Bobcat showed a faster-than-expected recovery. Sales for the first quarter are expected to rise 9% year-on-year to 1.1621 trillion KRW, and operating profit is expected to increase 39% to 120.8 billion KRW. This exceeds market consensus by 2% in sales and 8% in operating profit. Lee Dong-heon, a researcher at Daishin Securities, explained, "Since the U.S. market began to recover in earnest from the fourth quarter of last year, sales are expected to exceed consensus. Operating profit will improve due to efficient cost execution and strong demand in the retail sector caused by COVID-19."

In particular, direct benefits from U.S. infrastructure investment are anticipated. On the 11th, President Biden signed a stimulus package worth $1.9 trillion (approximately 2,100 trillion KRW), raising expectations for a U.S. economic recovery. Following the U.S. stimulus agreement, Doosan Bobcat has begun formal negotiations on infrastructure investments worth $3 trillion. Lee said, "Although the extent of benefits to small construction equipment from infrastructure investment is uncertain, since the inventory levels of negotiation targets are low, there is a possibility of inventory expansion just from improved sentiment. During the early Trump administration, there were no benefits from infrastructure investment, so there is potential for further performance improvement."

However, potential overhang from shares of Doosan Bobcat previously sold by Doosan Heavy Industries is expected. It is estimated that Doosan Heavy Industries sold about 10% of Doosan Bobcat's shares. Lee said, "There is an overhang burden around 40,000 KRW, but it is a volume that will eventually be resolved, so it is necessary to focus on annual performance. From the second half of the year, synergy is expected as the Doosan Industrial Vehicle (forklift) division will be reflected in the consolidated results."

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