[Click eStock] Daelim Industrial 'Extremely Undervalued Stock'

[Asia Economy Reporter Junho Hwang] Meritz Securities has set the target price for Daelim Industrial at 120,000 KRW.

Meritz expects Daelim Industrial's operating profit to have surged from 400 billion KRW in 2016 to exceed 1 trillion KRW in 2019, and to reach a record high of 1.2 trillion KRW in the fourth quarter of last year, including gains from the sale of the Seoul Forest office building. However, despite nearly triple growth in operating profit, no recovery in corporate value was observed.

In particular, Daelim Industrial will be re-listed on the 25th after the split. The split resulted in the holding company DL and the business company DL E&C. Meritz expects that the value of the post-split corporation DL E&C will be mostly determined by operating profit, estimating an appropriate market capitalization of about 3.2 trillion KRW. The value of DL is projected to reach a market cap of approximately 1.7 trillion KRW based on net asset valuation. Considering these figures, the market capitalization to operating profit valuation exceeds 5x, indicating that the company is extremely undervalued compared to other construction firms, leading to the target price being set at 120,000 KRW.