[Click eStock] "Deutsche Motors, Potential for Re-rating Due to Strong New Car Sales"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment has issued a buy investment opinion and a target price of 12,900 KRW on the 23rd for Deutsche Motors, stating that continuous attention is needed as the company's value could be re-evaluated if the profit ratio of high-profit business units such as Deutsche Autoworld and derivative businesses increases in the future.

Jung Min-gu, a researcher at Hana Financial Investment, said, "Deutsche Motors is expected to see an increase in recurring profit due to strong sales of new and used cars, and with the full-scale operation of Autoworld this year, synergies among business units such as Deutsche Financial, A/S Center, and Zika are expected to be maximized," adding, "The brand expansion to Deutsche Auto (Porsche) is also successfully progressing, growing into a multi-brand dealer."

For the second quarter of this year, sales are expected to increase by 23.9% year-on-year to 432.7 billion KRW, while operating profit is forecasted to decrease by 49% to 10.3 billion KRW. Deutsche Motors is expected to achieve new car sales of BMW and Mini at 312.8 billion KRW, up 23.1% year-on-year in the second quarter. Porsche new car sales are also expected to increase by 17.2% to 73.6 billion KRW.

This year's sales are estimated at 1.7828 trillion KRW (22.9%) and operating profit at 52.8 billion KRW (17.6%). Strong new car sales of BMW and Porsche and the full-scale operation of Autoworld are expected to drive significant increases in recurring profit due to sales growth in high-margin business units such as the A/S division, Deutsche Financial, and Zika division.

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