November 4, 2014
KOREA
Company News & Analysis Major Indices Close Chg Chg (%) NCsoft (036570/Buy/TP: W220,000) KOSPI 1,935.19 -17.78 -0.91 Long-awaited mobile games strategy to be unveiled KOSPI 200 246.51 -2.18 -0.88 KOSDAQ 542.16 -10.31 -1.87 CJ CheilJedang (097950/Buy/TP: W460,000) Re-rating could be in the cards Turnover ('000 shares, Wbn) Volume Value CJ Korea Express (000120/Buy/TP: W210,000) KOSPI 387,726 4,868 Structural profit growth justifies premium KOSPI 200 80,824 3,803 KOSDAQ 405,472 2,336
Dongsung Finetec (033500/Buy/TP: W16,500) Market Cap (Wbn) Order and earnings momentum still intact Value KOSPI 1,158,786 Hankuk Carbon (017960/Buy/TP: W9,600) KOSDAQ 139,325 Orders, earnings, and fundamentals are recovering KOSPI Turnover (Wbn) Buy Sell Net Sector News & Analysis Foreign 1,371 1,386 -16 Institutional 1,133 1,190 -57 Auto (Overweight) Retail 2,283 2,247 35 October global production KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 160 188 -28 Institutional 128 145 -17 Retail 2,043 1,999 44
Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,131 1,038 94 KOSDAQ 32 38 -6
Advances & Declines Advances Declines Unchanged KOSPI 190 633 57 KOSDAQ 199 783 29
KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value KODEX LEVERAGE 10,395 -160 300 Samsung Electronics 1,217,000 -18,000 290 Hyundai Motor 155,000 -5,000 228 KODEX INVERSE 8,180 60 117 Samsung Corp. 76,100 1,800 116
KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Com2us 165,000 -12,100 216 Bosung Power Tec 3,510 235 71 Daum Communications 142,500 500 59 Seoul Semiconductor 15,300 -900 41 GAMEHI 17,400 -1,650 40 Note: As of November 4, 2014
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NCsoft (036570 KS) Long-awaited mobile games strategy to be unveiled
Game Solid earnings expected in 3Q-4Q In 3Q, we believe royalty income from Blade & Soul China declined QoQ, as the title’s Company Update user indicators have failed to pick up even after its official launch in August. November 4, 2014 Lineage I revenue likely recovered QoQ, boosted by a microtransaction event. Marketing expenses likely fell compared to 2Q, when the company spent heavily on several new releases (WildStar and Blade & Soul Japan ). (Maintain) Buy For 3Q, we forecast revenue and operating profit to come in at W207.3bn (+22% YoY) Target Price (12M, W) 220,000 and W67.1bn (+118% YoY), respectively. We expect revenue to continue to grow in 4Q, supported by multiple microtransaction events for Lineage . Share Price (11/03/14, W) 147,000 New titles & mobile games strategy to be unveiled at G-Star 2014 Expected Return 50% NCsoft will have a significant presence at the annual game trade show, G-Star, which is set to begin in Busan on November 20 th . The company will also hold a premiere event in
Seoul two days before the show’s opening. OP (14F, Wbn) 248 Consensus OP (14F, Wbn) 251 At G-Star 2014, NCsoft is expected to build anticipation for upcoming releases , including Master X Master (MXM) and Lineage Eternal , and provide a clearer picture on its mobile EPS Growth (14F, %) 49.8 games strategy. Market EPS Growth (14F, %) 3.7 P/E (14F, x) 13.5 We see two possible strategies for mobile games. The company could go multi-platform, Market P/E (14F, x) 12.5 releasing both mobile and PC versions of blockbuster games (MXM and Lineage Eternal ), KOSPI 1,952.97 or it could debut a separate lineup for middle-core and hardcore mobile games on which Market Cap (Wbn) 3,224 the firm’s 200 mobile game developers have been working. Given NCsoft’s expertise in Shares Outstanding (mn) 22 high-resolution MMORPG, we have high hopes that new, high-quality mobile games will Free Float (%) 75.9 be unveiled. Foreign Ownership (%) 38.4 Maintain Buy and TP of W220,000 Beta (12M) 0.46 52-Week Low 123,500 NCsoft shares sold off this year, after initially high expectations for Blade & Soul China 52-Week High 248,500 were displaced by disappointment.
(%)(%)(%) 1M1M1M 6M6M6M 12M12M12M We believe the company’s asset holdings , which include W750bn in cash, W300bn in Absolute 17.6 -27.6 -30.0 treasury stock, and W600bn in property, will provide some downside support to shares. Relative 19.0 -27.3 -26.9 NCsoft’s robust assets, combined with a consistently stable cash flow and a potential increase in dividend payout, could shed renewed light on the company’s underlying 130 NCsoft KOSPI value. We maintain Buy on NCsoft with a target price of W220,000. 110
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Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/11 12/12 12/13 12/14F 12/15F 12/16F Revenue (Wbn) 609 754 757 817 906 1,049 [Internet/Game/Entertainment] OP (Wbn) 136 151 205 248 289 326
Chang-kwean Kim OP margin (%) 22.3 20.0 27.1 30.4 31.9 31.1 +822-768-4321 NP (Wbn) 121 156 159 238 256 288 [email protected] EPS (W) 5,529 7,120 7,245 10,851 11,696 13,144
Jeong-yeob Park ROE (%) 14.6 16.8 14.8 19.0 17.2 16.5 +822-768-4124 P/E (x) 55.6 21.1 34.3 13.5 12.6 11.2 [email protected] P/B (x) 7.0 3.0 4.4 2.2 1.9 1.6 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates
Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
CJ CheilJedang (097950 KS) Re-rating could be in the cards
Food & Beverage 3Q review: OP beats consensus, but NP misses For 3Q, CJ CheilJedang (CJCJ) posted a 1.7% YoY rise in revenue, a 123.3% YoY jump in Results Comment operating profit, and a 92.7% YoY decline in net profit. At the parent level, revenue inched down 2.2% YoY, operating profit grew 66.9% YoY, and net profit slumped 91.8% November 4, 2014 YoY. Operating profit was above the consensus, but net profit missed by a wide margin.
At the processed food unit, revenue and operating profit grew 2.1% YoY and 49.7% (Maintain) Buy YoY, respectively, aided by: 1) a reduction in stock keeping units (SKU), 2) cost savings, 3) new product releases, and 4) sales of Chuseok holiday gifts. The biotech unit returned to an operating profit of W10.4bn after four straight quarters in the red (3Q13-2Q14), Target Price (12M, W) 460,000 thanks to a recovery in lysine prices.
Share Price (11/03/14, W) 382,500 The net profit miss was attributable to much larger-than-expected losses related to F/X translation (W29.6bn) and grain futures (also W29.6bn). Expected Return 20% Key earnings variables for 2015 1) Higher lysine prices: We expect average lysine price to rise 14.6% YoY in 2015 to OP (14F, Wbn) 547 US$1,535/tonne from US$1,340/tonne in 2014. Chinese suppliers would still be unable Consensus OP (14F, Wbn) 548 to break even at that price level in 2015, suggesting industry restructuring will continue.
EPS Growth (14F, %) 17.4 2) Methionine sales: Recent supply disruptions have propelled methionine prices to Market EPS Growth (14F, %) 3.7 RMB110-120/kg (US$19,000/tonne) in November from RMB26-26.5/kg in April. Prices are likely to cool, but we estimate that, even if prices remain at around US$5,000- P/E (14F, x) 40.3 6,000/tonne in 2015, OP margin would be around 10-20%. Market P/E (14F, x) 12.5 KOSPI 1,952.97 3) Overseas growth of animal feed business: CJCJ plans to raise the overseas pro portion of its animal feed sales from 65% currently to 80% going forward. In Indonesia ( which Market Cap (Wbn) 5,018 accounts for 40% of overseas sales), CJCJ’s animal feed sales have been growing at 20- Shares Outstanding (mn) 14 30%. Growth could temporarily slow on F/X fluctuations, but we believe the overseas Free Float (%) 58.9 animal-feed market presents an attractive opportunity for CJCJ. Foreign Ownership (%) 19.3 Beta (12M) 0.34 4) Single-person households and market competition: CJCJ has continued to develop 52-Week Low 245,000 products tailored to single-person households, which prefer: 1) convenience/online stores over large discount stores, 2) quality over quantity, and 3) smaller-sized packages 52-Week High 416,500 over large. Meanwhile, market competition has eased this year, as companies are (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M shedding loss-making items and focusing on profitability. In 2015, we do not expect Absolute -0.5 22.8 48.3 industry competition to become intense enough to undermine profits. Relative 0.7 23.2 54.8 5) Key risks are grain prices and F/X. In 2015, grain prices are likely to modestly rise. As for F/X, we estimate a 5% rise in the US$/W rate leads to a 6.8% fall in operating profit. 180 CJ CheilJedang KOSPI 160 Maintain Buy and TP of W460,000 140 We expect CJCJ’s earnings to continue to improve in 2015, with revenue and operating 120 profit growing 8.9% and 22.3%, respectively . The company has been largely left behind 100 in this year’s re-rating of processed food names, including Ottogi, Pulmuone, and 80 Dongwon F&B. But, we believe a re-rating may be in the cards for CJCJ in 2015. We 10.13 2.14 6.14 10.14 reiterate our Buy rating and target price of W460,000.
Daewoo Securities CCo.,o., Ltd. FY (Dec) 12/11 12/12 12/13 12/14F 12/15F 12/16F Revenue (Wbn) 6,538 9,878 10,848 11,467 12,491 13,290 [F&B/Tobacco] OP (Wbn) 460 616 345 547 668 721
Woon-mok Baek OP margin (%) 7.0 6.2 3.2 4.8 5.3 5.4 +822-768-4158 NP (Wbn) 301 255 117 137 299 343 [email protected] EPS (W) 21,158 17,691 8,089 9,493 20,716 23,769 ROE (%) 10.8 9.0 4.0 4.7 9.7 10.2 Jungyeon Kwon +822-768-4161 P/E (x) 13.7 20.1 34.2 40.3 18.5 16.1 [email protected] P/B (x) 1.4 1.7 1.3 1.8 1.7 1.5 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates
Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
CJ Korea Express (000120 KS) Structural profit growth justifies premium
Logistics 3Q14 review: Revenue of W1.13tr and OP of W41.2bn For 3Q, CJ Korea Express (CJ Korex) reported revenue of W1.13tr (+8.9% YoY) and Results Comment operating profit of W41.2bn (+693% YoY) , which was above our estimate (W39.4bn), November 4, 2014 but broadly in line with the consensus (W42.9bn). 1) Parcel delivery : Volume expanded 18.1% YoY to a quarterly high of 154mn parcels . We estimate the utilization rate of active terminals was 86.6% (vs. total utilization of (Maintain) Buy 74.6%). Parcel delivery rates also rose 2% YoY to W2,100/parcel. Gross profit margin fell QoQ on higher costs during the Chuseok holiday season, but revenue improved. Target Price (12M, W) 210,000 2) Contract logistics: Revenue grew 10.4% YoY, as higher rates offset the impact of Share Price (11/03/14, W) 185,500 fewer business days. Gross profit margin improved to 13.9%, the highest level in recent quarters, driven by profitability-enhancing efforts, including price hikes for low-margin Expected Return 13% customers and better efficiency of owned equipment.
3) Global/stevedoring: At the stevedoring division, the operation rate of container ports OP (14F, Wbn) 164 remained at 90%, leading to continued cost savi ngs. Global (forwarding) revenue Consensus OP (14F, Wbn) 161 declined on won appreciation, but gross profit margin picked up 3.2%p YoY to 8.2% thanks to restructuring by overseas subsidiaries. EPS Growth (14F, %) - Market EPS Growth (14F, %) 3.7 The company returned to a net profit (W14.6bn), although the figure was weaker than P/E (14F, x) 65.4 projected due to miscellaneous losses (W5bn). Market P/E (14F, x) 12.5 KOSPI 1,952.97 Earnings growth getting back up to speed
Market Cap (Wbn) 4,232 In 4Q, parcel delivery volume is likely to rise 10% YoY to over 160mn parcels. Active Shares Outstanding (mn) 23 terminals should reach full capacity, prompting the operation of idle terminals. Par cel Free Float (%) 36.2 delivery rates should also fully recover to pre-merger levels, inching up 0.8% YoY to Foreign Ownership (%) 10.4 W2,160/parcel. We see gross profit margin rising to 10% on operating leverage effects Beta (12M) 0.43 from volume growth. 52-Week Low 81,000 At the contract logistics unit, gross profit margin sh ould top 14% on continued price 52-Week High 214,000 increases and seasonal pickup in year-end demand. The global (forwarding) unit should (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M also see better margins in the coming quarters now that overseas subsidiaries have Absolute 6.3 70.2 107.5 broken even. Relative 7.6 70.7 116.7 Retain Buy and TP of W210,000: Near-term pullback offers long-term entry point 270 CJ Korea Express KOSPI We maintain Buy on CJ Korex with a target price of W210,000. The stock has fallen 220 15.3% after rising above W200,000 on M&A expectations. With valuation already
170 looking burdensome (2015F P/E of 27.3x), investors ap pear to have taken profit, worried over the lack of momentum and the recent replacement of the company’s CEO. 120 However, we believe the stock will continue to receive a high premium, as 1) overseas 70 10.13 2.14 6.14 10.14 M&As should take shape, and 2) profits are likely to trend upward
Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/11 12/12 12/13 12/14F 12/15F 12/16F Revenue (Wbn) 2,588 2,627 3,795 4,492 4,906 5,335 [Transportation/Energy] OP (Wbn) 125 143 64 164 238 272
Jay JH Ryu OP margin (%) 4.8 5.4 1.7 3.7 4.9 5.1 +822-768-4175 NP (Wbn) 84 83 -56 65 155 170 [email protected] EPS (W) 3,703 3,630 -2,445 2,835 6,798 7,446 ROE (%) 3.9 3.7 -2.5 2.9 6.6 6.8 Choong-hyun Kim +822-768-4126 P/E (x) 20.3 27.7 - 65.4 27.3 24.9 [email protected] P/B (x) 0.6 0.8 0.8 1.5 1.4 1.4 Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates
Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
Dongsung Finetec (033500 KQ) Order and earnings momentum still intact
Machinery Snapshot: A global leader in the LNG insulation panel market Established in 1985, Dongsung Finetec is the world’s largest maker of LNG cryogenic Earnings Preview insulation. LNG insulation panels are designed to cool natural gas to -163 degrees Celsius to facilitate the storage and transport of LNG. These panels are mainly installed November 4, 2014 in LNG carriers, but are increasingly being used in FLNG facilities (LNG FPSO/FSRU), fixed offshore platforms, and offshore storage facilities. Dongsung Finetec and Hankuk Carbon together account for more than 90% of the LNG carrier-use insulation market. (Maintain) Buy In 2013, the company generated 72% of its revenue from LNG cryogenic insulation, 12% from sandwich panels, 8% from PU systems, 4% from high-pressure gas cylinders, and Target Price (12M, W) 16,500 4% from refrigerants/other sources. 3Q preview: Temporary slowdown; Order and earnings momentum still intact Share Price (11/03/14, W) 9,300 We forecast Dongsung Finetec to post 3Q revenue of W85.8bn (-24% YoY), operating Expected Return 77% profit of W6.9bn (-20% YoY), and net profit of W7bn (-9% YoY) . We believe revenue was weaker than expected due to delays in shipments to Hyundai Heavy Industries (HHI). Still, we estimate 3Q OP margin at 8.1%, the highest level since 3Q12. Despite a temporary revenue decline and unfavorable F/X, margins likely improved thanks to the OP (14F, Wbn) 29 company’s withdrawal from the loss-making high-pressure cylinder business. Pretax Consensus OP (14F, Wbn) 29 profit and net profit should come in above expectations, buoyed by lower interest EPS Growth (14F, %) 171.3 expenses resulting from balance sheet improvements. Market EPS Growth (14F, %) 3.7 We see earnings improving sharply YoY in 4Q, with record-high revenue of W126bn P/E (14F, x) 9.4 (+13% YoY), operating profit of W8.2bn (+60% YoY), and net profit of W6.5bn Market P/E (14F, x) 12.5 (+1,221% YoY). KOSDAQ 552.47 As of November, Dongsung Finetec has won new orders of W250bn YTD (vs. W300bn in Market Cap (Wbn) 251 2013). Recently, the company landed large orders for LNG carrier-use insulation panels, Shares Outstanding (mn) 27 making up for the 2Q-3Q sluggishness. The company also continues to diversify its Free Float (%) 59.4 insulation panel order base into LNG-FPSO and LPG carriers. With further order s for Foreign Ownership (%) 11.3 LNG carrier-use panels likely in November and December, we believe this year’s orders Beta (12M) 1.06 will handily exceed last year’s performance. 52-Week Low 7,740 The company’s balance sheet has been improving on the continued generation of 52-Week High 13,450 operating cash flow. Debt ratio fell to 191% at end-2Q14 (from 313% at end-2Q13), and annual interest expenses are expected to decline to W4.6bn in 2014 (from W 7.1bn in (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M 2013). Considering the strong financial health of other Dongsung Group affiliates, we Absolute 12.0 -18.4 -15.8 think the company will make steady efforts to improve its balance sheet as well. Relative 15.6 -17.5 -18.5
Reiterate Buy and TP of W16,500 140 Dongsung Finetec KOSDAQ We maintain our Buy call on Dongsung Finetec with a target price of W16,500. As the 120 LNG market takes off, the company is likely to see an increase in orders over the 100 medium to long term from LNG carriers, FLNG facilities, onshore facilities, and merchant ships (fuel tanks ). We believe the company has strong business scalability, thanks to its 80 turnkey solutions, which include the construction of membranes and onshore /offshore 60 pipelines, as well as supply of insulation panels for LNG carriers. 10.13 2.14 6.14 10.14
Daewoo Securities CCo.,o., Ltd. FY (Dec) 12/11 12/12 12/13 12/14F 12/15F 12/16F Revenue (Wbn) 178 239 409 430 471 522 [Small Cap] OP (Wbn) -2 16 21 29 37 45
Seung-hyeon Park OP margin (%) -1.1 6.7 5.1 6.7 7.9 8.6 +822-768-4194 NP (Wbn) -9 10 10 27 30 36 [email protected] EPS (W) -345 376 363 985 1,115 1,327 ROE (%) -13.3 14.6 12.4 27.4 24.4 23.2
P/E (x) - 20.0 29.5 9.4 8.3 7.0 P/B (x) 1.5 2.7 3.4 2.3 1.8 1.5 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates
Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
Hankuk Carbon (017960 KS) Orders, earnings, and fundamentals are recovering
Machinery Snapshot: Major LNG insulation panel producer Established in 1984 as a producer of carbon fibers for use in fishing rods, Hankuk Carbon Earnings Preview entered the LNG insulation business in 2001 and began supplying insulation panels to November 4, 2014 Samsung Heavy Industries (SHI) in 2002 and Hyundai Heavy Industries (HHI) in 2005. Since then, the company has diversified its business areas on the back of its
competitiveness in materials (namely carbon fibers). In 2013, the LNG insulation (Maintain) Buy business unit accounted for 63% of the company’s total revenue, with the carbon fiber, glass paper (GP), and composite material development units contributing 11%, 10%, and Target Price (12M, W) 9,600 5%, respectively. The company’s growth has been driven by the LNG insulation unit, while the GP and composite material development units, which have served as cash Share Price (11/3/14, W) 5,990 cows, have enhanced earnings stability
3Q preview: To report YoY slowdown, but orders and earnings are rebounding Expected Return 60% For 3Q, we estimate Hankuk Carbon’s revenue at W61.2bn (-7% YoY), operating profit
at W5.8bn (-16% YoY), and net profit attributable to controlling shareholders at OP (14F, Wbn) 25 W4.8bn (-35% YoY). Although earnings are believed to have slowed down YoY, the Consensus OP (14F, Wbn) 24 company’s top and bottom lines are estimated to have improved on a QoQ basis. In light EPS Growth (14F, %) 30.7 of the recovery of LNG insulation panel order s and the positive 4Q earnings outlook, we Market EPS Growth (14F, %) 3.1 believe fundamentals are also on the recovery path. We forecast the company will P/E (14F, x) 11.6 display sharp YoY earnings growth in 4Q, with revenue of W71.9bn (+32% YoY), an Market P/E (14F, x) 12.5 operating profit of W8.3bn (+76% YoY), and a net pro fit attributable to controlling KOSPI 1,952.97 shareholders of W6.3bn (turning to black YoY).
Market Cap (Wbn) 232 YTD new orders stand at roughly W160bn (vs. W220bn in all of 2013). Recent large- Shares Outstanding (mn) 39 scale orders (related to VLEC and LNG-FPSO) were more than enough to make up for Free Float (%) 76.2 poor intake in 2Q and 3Q. Strong new orders (W160bn, vs. W150bn YTD in LNG Foreign Ownership (%) 15.5 insulation-related revenue) suggests that the company’s growth momentum remains Beta (12M) 0.90 intact. Additional LNG orders are expected in November-December, and the company is 52-Week Low 5,050 anticipated to finalize a US$100mn LNG insulation supply contract with Imabari 52-Week High 9,280 Shipbuilding of Japan in the coming months.
(%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Maintain Buy with TP of W9,600 Absolute 6.4 -19.6 -33.4 Relative 7.7 -19.3 -30.4 We maintain our Buy rating on Hankuk Carbon with a target price of W9,600. The stock is currently trading at a 2014F P/E of 11.6x and a P/B of 0.9x. We believe that the merits
110 Hankuk Carbon KOSPI of the stock have been improving due to: 1) its recent correction and 2) expected 100 recoveries for orders and earnings. In addition, we think that the stock will see 90 downside support in light of the company’s s ound financials (with net cash of W97.7bn 80 as of end-2Q). 70 60 50 10.13 2.14 6.14 10.14
Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/11 12/12 12/13 12/14F 12/15F 12/16F Revenue (Wbn) 131 163 241 241 270 296 [Small Cap] OP (Wbn) 5 12 26 25 30 35
Seung-hyeon Park OP margin (%) 3.8 7.4 10.8 10.4 11.1 11.8 +822-768-4194 NP (Wbn) 6 6 15 22 26 30 [email protected] EPS (W) 204 160 394 515 624 713 ROE (%) 3.3 3.0 6.5 8.7 9.5 10.0
P/E (x) 27.6 45.3 20.8 11.6 9.6 8.4 P/B (x) 0.8 1.2 1.2 0.9 0.8 0.8 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates
Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASEPLEASEPLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSUREDISCLOSURESS & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.REPORT.
Auto (Overweight/Maintain)
October global production
¢ HMC’s October production was in line with our estimates; Kia’s misses due to partial labor strikes Sector Update ¢ Stronger momentum for Kia in 4Q14 November 4, 2014
October global production: +1.9% YoY for HMC, -7.0% YoY for Kia Daewoo Securities CCo.,o., Ltd. In October, Hyundai Motor’s (HMC) and Kia Motors’ (Kia) global production totaled 429,346
[Auto/Auto Parts/Tire] units (+1.9% YoY, +10.0% MoM) and 231,706 units (-7.0% YoY, -0.2% MoM), respectively. HMC’s Korean and overseas production in October broadly kept pace with our 4Q14 Michael Yun estimates; meanwhile Kia’s global production for the month lagged our estimate by 4.2%p +822-768-4169 (based on