[Featured Stock] SPG Significantly Undervalued Compared to Haesung TPC... Semiconductor Boom Expected to Drive 'Record High' Earnings

[Asia Economy Reporter Hyungsoo Park] SPG is showing strong performance. According to securities firms' analysis, the profitability is improving as demand for home appliances and industrial use increases simultaneously due to the impact of COVID-19, which seems to have influenced the stock price.

At 11:53 AM on the 22nd, SPG was trading at 10,250 KRW, up 8.47% from the previous day.

Leading Investment Securities analyzed that about 35% of SPG's total sales come from industrial motor sales. Jihoon Shin, a researcher at Leading Investment Securities, explained, "The final applications are diverse, including semiconductor and display transport equipment, inspection equipment, mask equipment, multi-joint robots, and automated warehouse systems," adding, "As industrial demand increases, its proportion is gradually rising."

He continued, "Following last year, orders for semiconductors are increasing," and "It is understood that new customers have been additionally secured in motors for air conditioning."

Furthermore, he emphasized, "Since the operating profit margin of industrial reducers and motors is nearly twice as high as that of home appliance use, it will play an important role in improving performance."

Researcher Shin also stated, "With Haesung TPC going public, the undervaluation of SPG's corporate value will be highlighted," emphasizing, "At a time when SPG's performance is normalizing and new industrial equipment orders are expected, a price-earnings ratio of 13.3 times is excessively undervalued."

Haesung TPC's PER based on the public offering price of 13,000 KRW is 33.6 times the expected performance this year. After the listing, the stock price surged sharply and is currently trading at 39,000 KRW.

Researcher Shin analyzed, "In terms of operating profit margin, Haesung TPC's 8.7% is higher than SPG's 5.2%," adding, "Even considering the high sales growth rate, the current valuation gap between Haesung TPC and SPG is insufficiently explained."

It is estimated that SPG will achieve sales of 383.2 billion KRW and operating profit of 20 billion KRW this year, representing increases of 8.0% and 10.7%, respectively, compared to last year. It is expected to achieve record-high performance. By reorganizing subsidiaries that were obstacles to improving consolidated performance, Researcher Shin predicted that industrial growth will be fully reflected in the results.