NH Investment & Securities reported on the 18th that the slowdown in China's construction equipment market and sharp rise in raw material and logistics costs are putting a burden on the valuation of DY Power.
As a small and medium-sized parts maker, it is evaluated that it lacks market leadership compared to large companies.
The investment opinion remained 'buy' and the target price was lowered from 31,000 won to 26,000 won.
"Its contribution to the Chinese market has slowed down from the third quarter, but it can cope with a steady recovery of demand from advanced markets," NH Investment & Securities said. "Even considering the concern factors, the current stock price is excessively undervalued compared to the industry average.".
Sales of excavators in China fell 38.3% year-on-year to 13,934 units in September. NH Investment & Securities said that China's infrastructure investment momentum has been a growth engine for the company since last year, but it has emerged as a burden factor since the second half of the year.
However, the growth rate for other regions is estimated to be the US (+186%), Europe (+52%), and Japan (+50%), and as a result, dependence on China is gradually being resolved.
Estimates for third-quarter business performance were 78.3 billion won in sales and 7.3 billion won in operating profit, up 25.5 percent and 1.3 percent from a year earlier, respectively, below the consensus.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
