[Click eStock] "Doosan Bobcat, 2Q Earnings Surprise... Eases Concerns Over US Demand Slowdown"

[Asia Economy Reporter Myunghwan Lee] Samsung Securities announced on the 29th that it maintains a buy rating and a target price of 50,000 KRW for Doosan Bobcat. This is due to the company's strong performance in the second quarter despite concerns about weakening demand in the North American market.

Doosan Bobcat's sales and operating profit in the second quarter of this year grew by 73% and 121%, respectively, compared to the same period last year. These figures exceeded market expectations by 24% and 63%, respectively. In dollar terms, sales and operating profit increased by 55% and 98%, respectively. Samsung Securities noted that even excluding the industrial vehicle division acquired last year, sales rose by 33% and operating profit by 84%.

It is evaluated that Doosan Bobcat delivered a significant earnings surprise in the second quarter, far surpassing market expectations. Although the sales for this quarter included some shipments that were delayed in the first quarter due to supply chain disruptions, the company still posted strong results excluding these. Doosan Bobcat has already achieved 72% of its annual operating profit guidance in the first half of the year, with continued effects from price increases and reduced sales promotion expenses. The net profit growth rate was lower than operating profit due to one-time losses from early repayment of high-interest borrowings and foreign exchange losses on funds borrowed by the headquarters from its North American subsidiary.

Samsung Securities analyzed that the company's strong second-quarter performance proves that demand in its core markets remains robust. This is because it is impossible to raise prices or reduce sales promotion expenses in markets with weak demand. It also shows that the impact of the slowdown in U.S. housing indicators on Doosan Bobcat's operations is not as significant as investors fear. Samsung Securities pointed out that concerns about weakening North American demand are premature. Furthermore, even if retail demand slows, considering that Doosan Bobcat's dealer inventory remains extremely low, demand for dealer inventory replenishment is expected to support Doosan Bobcat's sales.

Youngsoo Han, a researcher at Samsung Securities, said, "Currently, Doosan Bobcat's valuation is excessively discounted compared to overseas competitors. Unlike competitors, Doosan Bobcat's profit outlook has been revised upward throughout this year, and it has resumed dividends that were previously suspended. Taking these factors into account, this discount will eventually be resolved."

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