[Click eStock] Spotlight on 'Ecopro HN', the spin-off company of 'Ecopro'

[Asia Economy Reporter Lee Seon-ae] Daishin Securities stated on the 28th that attention should be paid to the corporate value of the newly established company Ecopro HN.

After the spin-off re-listing, the appropriate market capitalization is evaluated at 1.24 trillion KRW for the holding company (Ecopro) and 880 billion KRW for the operating company (Ecopro HN). The previously combined market capitalization was 2.2 trillion KRW.

During the trading suspension period, the stock market showed weakness, and the stock price of Ecopro BM, a subsidiary that has an absolute impact on the holding company's valuation, also declined. Based on the net asset value on the balance sheet as of May 1 (the spin-off date), the reference stock price is 77,400 KRW for the holding company (market capitalization 1.45 trillion KRW) and 62,200 KRW for the operating company (market capitalization 240 billion KRW).

Researcher Han Sang-won of Daishin Securities said, "It is common for the holding company's stock price to fall and the operating company's stock price to rise upon spin-off re-listing, and a similar stock price trend is expected this time based on past cases," adding, "However, if the holding company also falls significantly below its appropriate value, it is recommended to use this as a buying opportunity."

Ecopro's first-quarter operating profit (based on consolidated figures before the spin-off) was 20.9 billion KRW (+96% YoY), meeting market expectations (22 billion KRW). The core subsidiary Ecopro BM recorded an operating profit of 17.8 billion KRW (+102% YoY) thanks to sales recovery and profitability improvement.

Ecopro HN (environmental business) is expected to achieve annual sales of 171.9 billion KRW (+78% YoY) and operating profit of 33.5 billion KRW (+47% YoY). Considering the first-quarter results, this is somewhat high, but given the concentration of sales in the second half (fourth quarter), it is expected to be achievable.

Researcher Han said, "We anticipate the hidden value of the environmental business, which has not been recognized as significant value, to be highlighted, and the stock price upside potential of Ecopro HN compared to the reference price is about 259%," adding, "As a company generating 100% of its sales in the eco-friendly sector, it holds a stable cash cow (chemical filters, greenhouse gas reduction, etc.) and, utilizing its unique MW technology, it is expected to expand fine dust reduction solutions and new businesses (dehumidification, drying), with an expected average annual sales growth of 32% until 2025."

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