Dongwha Corporation significantly improves electrolyte profitability... Target price raised (Hana Financial Investment)

Hana Financial Investment predicted on the 15th that the profitability of Donghwa Corporation will rise significantly to more than 10% of its operating profit ratio from the third quarter. The target price has been raised from 81,000 won to 106,000 won. Investment opinion 'buy' was maintained.

"Unlike major secondary battery material companies defending their profitability by reflecting rising raw material prices in their selling prices, the electrolyte market has not been able to reflect the cost increase as a selling price for a long time," Hana Financial Investment said. "However, this trend will change significantly from the third quarter.". Consolidated sales in the third quarter rose 17% year-on-year to KRW 223.2 billion and operating profit rose 61% to KRW 30.2 billion.

However, it is expected that the construction materials sector will be sluggish due to worsening Vietnamese corporate performance due to restrictions on moving to Vietnam, and that a reduction in sales and operating profit will be inevitable compared to the previous quarter.

The annual performance in 2021 is expected to be 955.7 billion won in sales and 128.7 billion won in operating profit. It is expected to increase 28% and 93% year-on-year, respectively. The proportion of secondary battery material sales is expected to rise from 7% in 2020 to 9% in 2021, 19% in 2022 and 30% in 2023.

Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com