[Featured Stock] Dongwha Enterprises Benefits from Transition to All-Solid-State Batteries... Fair Price Target 70,000 Won

[Asia Economy Reporter Hyungsoo Park] Dongwha Enterprise is showing strong performance. It appears that securities firms' analysis, which views the company as an electrolyte supplier for secondary battery materials and considers it undervalued, has influenced the stock price.

As of 2:25 PM on the 6th, Dongwha Enterprise is trading at 44,100 KRW, up 18.23% from the previous trading day.

Dongwha Enterprise acquired Panax Etec, which was spun off from Cheil Industries, last year and started its secondary battery electrolyte business. It supplies electrolytes to Samsung SDI and SK Innovation. As the largest domestic electrolyte supplier in a market led by Japanese companies, it is expected to benefit from localization.

Juminwoo, a researcher at Meritz Securities, explained, "Production capacity will increase from 33,000 tons last year to 61,000 tons next year," and added, "We expect performance improvement due to the production effect of the Gen5 prismatic batteries of the main customers."

He continued, "There needs to be a shift in perception from a building materials company to a secondary battery materials company," and he suggested a target price of 70,000 KRW by applying a 42x multiple to the 2021 EPS."

He emphasized, "The reason for the premium valuation is that there is no risk regarding the technological shift to solid-state batteries, which will expand in 2025, but rather a benefit," and added, "Dongwha Enterprise jointly developed the solid electrolyte, a core component of solid-state batteries, with its customers."

He analyzed, "They are also developing solid electrolytes by forming a consortium with battery companies," and "Ultimately, the introduction of solid-state batteries will further strengthen Dongwha Enterprise's market position."

He judged that if companies have the same secondary battery sales ratio, Dongwha Enterprise possesses factors that warrant a premium in corporate value.