[Click eStock] "DMS, Benefiting from China's Display Investment Expansion... Target Price Up 70%"

Hana Financial Investment Report
Operating Profit Expected at 34.3 Billion KRW This Year... 51% Increase Compared to Last Year

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on DMS on the 14th and raised the target price by 70% from the previous level to 18,200 KRW. This is based on the analysis that operating value could increase due to improved profitability of display equipment and the commencement of the wind power business.

In the second quarter, sales and operating profit recorded 59.5 billion KRW and 8.6 billion KRW respectively, up 22.5% and 30% compared to the same period last year. The company posted strong performance due to robust sales of its main product, display equipment, and reduced expenses at its China subsidiary. The reduction in expenses at the China subsidiary was influenced by a decrease in local staff since 2017 and a reduction in selling and administrative expenses such as external activity costs due to the impact of COVID-19.

Jeonggi Lee, a researcher at Hana Financial Investment, said, "According to the investment schedules of client display companies, the largest amount of equipment is expected to be delivered in the third quarter," adding, "More equipment is also expected to be delivered in the fourth quarter compared to the second quarter." On the 8th, DMS already secured orders worth a total of 52.7 billion KRW from two Chinese display companies. Since the improvement in profitability of display equipment is not a one-time event, the increase in operating profit margin due to sales growth in the second half is expected to be more pronounced.

This year, the company's sales and operating profit are expected to increase by 22% and 51% respectively from the same period last year, reaching 239.4 billion KRW and 34.3 billion KRW. The researcher explained, "Since investments by Chinese display companies are expected to be concentrated in the third quarter, performance is expected to exceed that of the first half."

He added, "Considering the wind power generation business starting in the second half and the increase in the equity value of the subsidiary Biol, the company's corporate value is expected to rise further."