[Click eStock] Shinhan Investment Corp: "Inseon ENT, Short-term Performance and Mid-to-Long-term Growth Potential Expected"

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment stated on the 17th that they expect not only this year's performance but also mid- to long-term growth potential for Inseon ENT due to the expansion of the Yeongheung Industrial Environment incinerator and the Golden Eco landfill expansion.

Inseon ENT's operating profit in the fourth quarter of last year was 13.7 billion KRW, a 26% increase compared to the same period last year, exceeding market expectations. During this period, sales increased by 26% to 62 billion KRW. The company boosted its performance by strengthening its construction waste treatment division through the acquisition of Paju B&R and Yeongheung Industrial Environment in the second half of last year. The landfill division's performance in the fourth quarter of last year is estimated at sales of 11 billion KRW and operating profit of 6.6 billion KRW.

This year, sales and operating profit are expected to grow by 25% compared to the previous year, reaching 260.4 billion KRW and 61.4 billion KRW, respectively. In particular, sales from the newly acquired construction waste treatment division are expected to increase by 38% year-on-year to 151.2 billion KRW. For the landfill division, a high treatment unit price has been maintained since the operation of the Gwangyang landfill in the second half of 2019. This is because the Gwangyang landfill processes designated waste, which commands a relatively higher unit price. The treatment unit price per ton, which was 147,000 KRW at the end of 2019, rose by about 12% to 165,000 KRW at the end of last year. Sales for the landfill division this year are projected to be 45.1 billion KRW (+8%).

Kim Gyuri, a senior researcher at Shinhan Financial Investment, said, "Inseon ENT's stock price has risen 35% over the past three months," adding, "This is due to synergy with the parent company within the waste industry and expectations for performance growth from consecutive acquisitions of new subsidiaries. A valuation rerating is expected for the company, which has established the entire value chain (landfill, incineration, intermediate treatment of construction waste) within the waste industry."