[Click eStock] "CS Wind Decides on Capital Increase to Prepare for the Biden Era"

Korea Investment & Securities
Target Price Up 37%... 170,000 Won

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating on CS Wind on the 24th and raised the target price by 37.1% from the previous level to 170,000 KRW. This adjustment follows the upward revision of valuations for global renewable energy companies due to the election of Joe Biden as the U.S. president.

On the 20th, after market close, CS Wind announced a paid-in capital increase to establish onshore and offshore wind tower production bases in the United States. The company plans to issue 3.8 million common shares, with the issue price fixed as of January 18, 2021. Of the funds raised through the capital increase, 291.6 billion KRW will be allocated to building production bases, and 58.7 billion KRW will be used for raw material purchases in the first half of next year. After the paid-in capital increase, a 1-for-1 stock dividend for common shares is planned.

Joe Biden, the 46th president of the United States, announced an environmental pledge to install 5 million solar panels and 60,000 domestically produced wind turbines over the next five years. This plan aims to increase the share of renewable energy in U.S. power generation while expanding employment within the eco-friendly industry.

Haneul Jung, a researcher at Korea Investment & Securities, said, “Although short-term shareholder value dilution due to paid and free capital increases is regrettable, it is about securing mid- to long-term growth momentum through establishing production bases in the U.S., where rapid growth in the global wind market is expected. It is advisable to view the stock price adjustment as a buying opportunity.”

CS Wind’s target PER was revised upward by 34% from 34.3 times to 42.4 times following the valuation upgrade of global renewable energy companies. Researcher Jung explained, “Considering the upward revision of net profit forecasts and the target PER adjustment, the target price would be 207,000 KRW, but taking into account the dilution from the paid-in capital increase, we present a target price of 170,000 KRW.”