[Click eStock] "Doosan Bobcat, Time for a Turnaround... Growth Next Year Just by Building Inventory Network"

[Asia Economy Reporter Ji Yeon-jin] Korea Investment & Securities announced on the 9th that it has set a target price of 59,000 KRW for Doosan Bobcat by applying a price-to-earnings ratio (PER) of 15 times to the average earnings per share (EPS) for this year and next, considering that the stock prices of global competitors have been adjusted since May and the PER has dropped to the 15-20 times range.

Choi Kwang-sik, a researcher at Korea Investment & Securities, said, "Since May, stock prices have fallen due to concerns about inflation, logistics disruptions, and supply shortages of key components, but this is a typical phenomenon during a boom period," adding, "Typically, price increases follow cost ratio increases, but currently, an unusual large-scale price increase is underway, so next year's sales are expected to increase by 20% due to price hikes and the acquisition of Doosan Industrial Vehicles (0.5 trillion KRW), and EPS is expected to increase by 32%."

Doosan Bobcat's dealer inventory, which is normally 3-4 months, was only about one month in the third quarter, leading to expectations that sales will grow in 2022 simply by rebuilding sales network inventory. Although there are concerns about a peak-out in U.S. construction indicators, the construction equipment shipment-inventory cycle remains strong with no immediate issues, and European construction industry indicators, which lag North America by one year, have successfully achieved a V-shaped recovery.

Researcher Choi said, "The U.S. infrastructure policy bill passed the House last weekend," and added, "Assuming a 10% share of construction equipment in the $550 billion traditional infrastructure investment, a 20% share for compact equipment, and a 30% market share for Bobcat, new vehicle sales for Bobcat are estimated at $1.9 billion over 5 to 8 years."

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