[Click eStock] "Duzon Bizon with Techfin Business Becoming Visible"

Accounts Receivable Factoring Business Materializes... Expansion Potential Increases with Corporate Credit Rating Business

[Asia Economy Reporter Minwoo Lee] Financial institutions purchasing accounts receivable from companies at a discount and lending funds to companies through accounts receivable factoring businesses are expected to highlight Duzon Bizon as a leading techfin (technology + finance) company in Korea.

On the 13th, IBK Investment & Securities maintained its 'Buy' rating and target price of 110,000 KRW for Duzon Bizon based on this background. The closing price the previous day was 95,900 KRW.

First, the third-quarter earnings this year are expected to slightly miss market consensus. It is forecasted to record consolidated sales of 80 billion KRW and operating profit of 19 billion KRW in the third quarter, representing increases of 9.6% and 17.8% respectively compared to the same period last year. According to financial information analysis firm FnGuide, the market consensus for Duzon Bizon is sales of 81.7 billion KRW and operating profit of 19.7 billion KRW.

Lee Seunghoon, a researcher at IBK Investment & Securities, analyzed, "The increase in COVID-19 cases delayed improvements in the expansion of enterprise resource planning (ERP), which involves many face-to-face tasks. However, sales were able to grow steadily as the business platform 'WEHAGO' and cloud sectors grew stably through non-face-to-face sales."

Meanwhile, operating profit margin is expected to rise by 1.6 percentage points compared to the same period last year due to cost control effects. From the fourth quarter, cloud sales related to smart factories are expected to increase, leading to a significant improvement in performance.

More notably, there is potential for expansion in the techfin business. Starting with the accounts receivable factoring business, it is anticipated to expand into areas such as corporate credit evaluation. The accounts receivable factoring business, in which Mirae Asset Capital, Welcome Savings Bank, and Korea Investment Savings Bank are participating, is already being launched in earnest. The business is progressing through the WEHAGO platform, which is used by more than 26,000 companies. Since there are already over 60,000 online and offline ERP customers receiving maintenance, the potential demand is considered sufficient. Once the system integration and construction work with Welcome Savings Bank and Korea Investment Savings Bank are completed, sales are expected to accelerate from 2022.

Last year, electronic tax invoices generated through Duzon Bizon amounted to approximately 350 trillion KRW. The related fee rate is expected to reach an annual average of 8%, contributing to profit improvement from 2022. The Korea Federation of SMEs, which recently signed a memorandum of understanding (MOU), is conducting marketing for 'WEHAGO' targeting small and medium-sized enterprises and is highly likely to participate in the accounts receivable factoring business in the future.

The researcher stated, "As the accounts receivable factoring business becomes full-fledged, various data such as sales and financials of small and medium-sized enterprises will accumulate, and the corporate credit evaluation model will also be advanced. Based on its own credit evaluation model, new value-added creation will be possible."