[Click eStock] "YNTech, the Most Undervalued Waste Management Operator"

[Asia Economy Reporter Park Ji-hwan] NH Investment & Securities evaluated YNTEC on the 20th as the most undervalued stock among waste management companies. However, no separate investment opinion or target price was presented.

YNTEC is a waste landfill and incineration operator in the Jeollanam-do region. Although 60% of its sales come from non-environmental industries (shipping, golf course business, etc.), which leads to undervaluation compared to peers, this year 80% of operating profit is generated from the environmental industry, weakening the basis for undervaluation, according to analysis.

This year's price-to-earnings ratio (PER) is 8.4 times, showing the highest valuation attractiveness within the industry. Baek Joon-gi, a researcher at NH Investment & Securities, said, "As of the end of 2021, YNTEC has a PER of 8.4 times, the most attractive valuation among listed waste management companies," adding, "The main reasons for undervaluation are the low proportion of environmental sales and the concentration of business in Yeosu, Jeollanam-do."

As of the end of 2021, YNTEC's sales composition was 40% environmental, 38% shipping, 11% ready-mixed concrete, and 11% golf courses. Compared to other environmental industry companies, the low environmental proportion and the large share of chemical transport, which has low profitability, are factors for undervaluation. Researcher Baek emphasized, "Looking at the operating profit composition, environmental is 82%, shipping 1%, ready-mixed concrete 5%, and golf courses 12%, so there is no reason for undervaluation based on PER compared to other waste management companies."

Among businesses outside waste management, the golf course business is noteworthy. Due to increased golf demand and expansion this year, operating profit is expected to grow more than double to over 4 billion KRW compared to the previous year. Researcher Baek said, "The third quarter of this year is expected to record the highest performance in history, and growth is anticipated next year as well," adding, "The book value of tangible assets (courses, landscaping) is recorded at 17.8 billion KRW, showing a large gap with market prices."

Regarding the landfill business, which is core to operating profit, nationwide landfill input price increases are expected next year, forecasting record-high performance. He stated, "Based on this year's performance alone, sales of 114.3 billion KRW and operating profit of 35.5 billion KRW represent increases of 7.8% and 11.9%, respectively, compared to the previous year, demonstrating sufficient valuation attractiveness."

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