[Special Stock] Seongchang Enterprise Holdings, Plywood and PB Prices Surge... Market Cap Doubles with Asset Value as a Bonus

[Asia Economy Reporter Hyunseok Yoo] Amid growing concerns about inflation weighing on the stock market, Seongchang Enterprise Holdings' stock price is showing an upward trend. This appears to be the result of increased expectations for improved earnings following the recent boom in the building materials market and the sharp rise in prices of plywood and particle board (PB).

As of 9:22 AM on the 12th, Seongchang Enterprise Holdings was trading at 3,305 KRW, up 2.32% (75 KRW) compared to the previous trading day.

Seongchang Enterprise Holdings is a pure holding company with subsidiaries including Seongchang Enterprise (plywood) and Seongchang Board (PB).

Junki Baek, a researcher at NH Investment & Securities, explained, "Seongchang Enterprise Holdings' performance moves in tandem with the building materials market," adding, "The business conditions for plywood used in building materials and PB products for furniture are currently improving." He continued, "Through significant restructuring in 2019, the cost structure was improved," and emphasized, "We expect a performance turnaround this year due to favorable changes in the upstream industries."

Researcher Baek analyzed, "Seongchang Enterprise Holdings anticipated a tightening supply situation for raw timber, which is the raw material for plywood, this year and has currently stockpiled the maximum amount of raw timber," adding, "This has preemptively reduced the risk from the sharp rise in timber prices."

He further predicted, "Operating profit margin will improve significantly due to increased sales from rising product demand and price hikes," expecting it to rise from 4.7% last year to 9.3% this year.

He also estimated, "The land value is twice the market capitalization," and projected, "Operating profit will reach around 20 billion KRW for the first time in 10 years." Sales are expected to reach 204 billion KRW and operating profit 19 billion KRW this year, representing increases of 19.4% and 136.8% respectively compared to last year.

Researcher Baek analyzed, "The asset value from the owned Dadae-dong land (45,000 pyeong, book value 222.5 billion KRW) and Bonghwa forest land (24.59 million pyeong, book value 201.6 billion KRW) alone is more than twice the market capitalization."

He emphasized, "While the company was previously noted for its asset value such as land value, from this year onward, its operating value due to profit improvement will be highlighted," adding, "Since there was almost no accumulated operating profit over the past 10 years, this profit improvement will stand out even more."