[Click eStock] "Dongwha Enterprise, Steady Growth Across All Business Divisions"

[Asia Economy Reporter Hyunseok Yoo] KB Securities analyzed on the 23rd that Dongwha Enterprise is expected to see steady growth across all business divisions. No investment opinion or target price was provided.

Dongwha Enterprise, established in 1948, is the leading wood processing company in Korea. The Materials Division produces wood boards used for furniture and interior materials. The Housing Materials Division's main products include laminate flooring and design walls. Through Dongwha Electrolite, the company also operates in the electrolyte business segment, a secondary battery material.

Researcher Sang-guk Lim of KB Securities stated, "The housing (building materials) business, which accounted for 15.6% of total sales last year, is expected to benefit from favorable conditions in the upstream market. Dongwha Enterprise solidified its industry-leading position with a 47.7% market share in laminate flooring and 32.8% in hardwood flooring as of last year. Demand for flooring is expected to increase just before apartment move-ins due to finishing material supply prior to apartment completion."

He explained, "As global demand for MDF (medium-density fiberboard) increases, prices are normalizing. In Korea, MDF prices fell in 2019 due to large imports of low-cost MDF from Southeast Asia, but recently, due to rising demand and increased shipping costs, domestic MDF prices have recovered to pre-2019 levels. Both price increases and demand growth are expected to drive performance."

The secondary battery business is also expected to perform well. He said, "The Hungary plant is scheduled to be completed this month. As of 2020, electrolyte sales accounted for only 7.2% of total revenue, but with the expansion of the new customer portfolio, sales contribution is expected to increase." He added, "Dongwha Enterprise's secondary battery performance is also expected to remain solid due to the expansion of electric vehicle-related businesses by major clients such as Samsung SDI and SK Innovation."