[Click eStock] Korea Shipbuilding & Offshore Engineering, Holding Company but Priced Too Low

[Asia Economy Reporter Lee Seon-ae] Cape Investment & Securities on the 19th newly issued a 'Buy' investment opinion and a target price of 128,000 KRW for Korea Shipbuilding & Offshore Engineering. The target price was calculated by applying a 35% discount rate to the sum of the fair values of investment assets and then adding net cash.

Kim Yong-min, a researcher at Cape Investment & Securities, explained, "Korea Shipbuilding & Offshore Engineering is a mid-level holding company that owns both the world's No.1 large shipbuilder and a medium-sized shipbuilder," adding, "It is unfortunate that the absence of a separate business division limits the drivers of the stock price."

Considering the reversal of provisions related to thick plates in the third quarter, the absence of separate impairment losses, and the recent upward trend in ship prices, it was judged that the possibility of deficits due to one-time cost provisions in the future is low.

Researcher Kim said, "The investment attractiveness has decreased due to the successive listings of core subsidiaries, and if the acquisition and merger of Daewoo Shipbuilding & Marine Engineering is unconditionally approved, there is a possibility of worsening investor sentiment due to capital expansion for financial structure improvement," emphasizing, "Nevertheless, the current stock price does not properly reflect the value of the consolidated companies, and even applying a somewhat high discount rate, it falls short of the fair value."