Hana Financial Investment judged that KG ETS will be able to raise its valuation due to structural external growth in the steel sector and joint growth of its headquarters and subsidiaries due to performance turnarounds in the bio sector. As a result, the company launched new coverage by offering a target price of KRW 18,500 and an investment opinion of 'buy.'.
Hana Financial Investment estimated in a report on the 14th that KG ETS's consolidated operating profit this year will rise 1,125.6% to KRW 234 billion compared to the same period last year. It is analyzed that the increase in the price of steel plates due to the global steel supply cottage, and the performance turnaround of the bio sector due to the increase in the unit price of bio heavy oil will support this.
The environmental energy sector also predicted that the unit price of designated waste disposal is on the rise every year, and sales of steam for the Sihwa Industrial Complex are expected to increase more than 30% year-on-year in 2021 due to the COVID-19 base effect, contributing to the improvement of KG ETS's appearance and profitability.
Hana Financial Investment analyzed that KG ETS's current stock price level is undervalued just by the value of its subsidiary's stake.
KG ETS acquired an additional stake in KG Steel at the end of 2020 (48%→51%), and from the first quarter of 2021, the recognition of the performance of subsidiaries such as KG Dongbu Steel began.
Considering the external growth of the environmental energy and bio sectors (headquarters) in 2021, the current stock price is clearly undervalued.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
