[Click eStock] Daechang Danjo, Benefiting from China's Excavator Record High and US $2 Trillion Job Investment, 'Undervalued'

[Asia Economy Reporter Hyungsoo Park] Research Alom analyzed on the 3rd that Daechang Danjo is expected to benefit from the surge in excavator sales in China. The target stock price was set at 13,200 KRW.

Researcher Kim Doyoon of Research Alom explained, "Excavator sales in China in March reached 72,977 units, an increase of 56.6% compared to the same period last year," adding, "It recorded the highest sales volume ever."

He continued, "The cumulative sales volume for the first quarter of this year was 113,565 units, an 85.3% increase compared to 61,277 units in the same period last year," and added, "This is understood to be the continued effect of the economic stimulus measures that began in the second quarter of last year."

He predicted, "With the replacement cycle arriving this year and additional demand before the implementation of next year's construction machinery-related environmental regulations, the Chinese excavator market will continue to grow."

Researcher Kim emphasized, "Based on cumulative sales volume in March, Daechang Danjo has secured major clients such as Doosan Infracore, ranked second in the Chinese market, and Hyundai Construction Equipment, ranked fourth," and added, "In the first quarter of this year, Doosan Infracore announced its highest-ever sales revenue, and Hyundai Construction Equipment announced its highest-ever operating profit."

Furthermore, he analyzed, "Jinseong T.E.C., a KOSDAQ-listed company, saw its stock price rise about 66% over approximately two months," and "Daechang Danjo, which mainly produces link parts, is currently significantly undervalued compared to companies in the same industry."

He also explained, "On the 28th of last month, U.S. President Joe Biden reiterated the necessity of a stimulus budget in his first joint address to Congress," adding, "Following the $1.9 trillion COVID-19 emergency relief budget passed by Congress, he urged the passage of the $2.25 trillion American Jobs Plan, which focuses on infrastructure investment."

He emphasized, "As the American Jobs Plan, which President Joe Biden described as a once-in-a-generation investment in the United States, is promoted, infrastructure investment will increase and demand for construction machinery will also rise," adding, "The subsidiary of Daechang Danjo located in Michigan, USA, is expected to benefit."

On a consolidated basis, Daechang Danjo is estimated to record sales of 305.1 billion KRW and operating profit of 23 billion KRW this year, representing increases of 15.4% and 20.1% respectively compared to the previous year. Researcher Kim analyzed, "Although there is a recent issue of raw material price increases, Daechang Danjo can raise prices accordingly," and "Quarterly operating profit margins are expected to gradually rise."