[Click eStock] Igeon Industry "A Stock You Should Not Miss and Must Buy"

[Asia Economy Reporter Lee Seon-ae] Yuanta Securities stated on the 17th that an active buying strategy is valid for Igeon Industrial.

Igeon Industrial operates in the wood business centered on plywood and flooring, as well as in forestry and energy businesses. The sales proportion by business segment shows that the wood sector accounts for more than 80%, including domestic performance of Igeon Industrial (separate) and its Chilean subsidiary (Eagon Lautaro S.A, hereafter ELA). Additionally, it operates overseas forestry in the Solomon Islands and a district energy business through its subsidiary Igeon Energy. The largest shareholder is Igeon Holdings (34.2%), and including related parties’ shares, it amounts to approximately 35.7%.

The remarkable profit growth of the Chilean subsidiary (ELA, 100% stake) in 2021 is expected to be a clear investment point for Igeon Industrial. ELA’s sales distribution is known to be about 40% in Chile, 30% in Europe, and 15-20% in the United States, and the surge in U.S. wood demand along with the expansion of the Chilean market is expected to drive the company’s overall performance.

This year’s performance is expected to reflect improvements across all business sectors, including remarkable profit growth in the wood business centered on the Chilean subsidiary. The forestry segment, which had a low performance base due to about 7 billion KRW in forestry asset impairment losses (reflected in operating profit) caused by COVID-19 in Q4 2020, and the energy segment are also expected to recover.

Researcher Kim Gi-ryong of Yuanta Securities said, "Considering the expectation of achieving the company’s highest annual operating profit (estimated in the mid-300 billion KRW range) and the momentum of overseas wood business, it is judged that an active buying strategy at the current market capitalization level (156.1 billion KRW) is necessary." No target price was suggested.