[Click eStock] DY, the Core Beneficiary of Autonomous Driving and Electric Vehicles, 'Severely Undervalued'

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment advised on the 20th that DY is transforming from a value stock to a growth stock, and therefore it is necessary to expand interest. However, no investment opinion or target price was presented.

Choi Jae-ho, a researcher at Hana Financial Investment, emphasized, "Based on DY's expected 2022 performance, the price-to-earnings ratio (PER) is 8 times, and the price-to-book ratio (PBR) is 0.5 times, indicating a very undervalued situation," adding, "Even excluding benefits from autonomous driving and electric vehicles, the valuation attractiveness is very high."

DY's 100% subsidiary DY Auto jointly developed an exclusive 'sensor cleaning system' for autonomous driving Level 4 with Hyundai Motor Company. The sensor cleaning system is equipment that prevents contamination of LiDAR, cameras, and other sensors installed in autonomous vehicles from dirt and dust. Since safety is paramount in autonomous driving, the sensor cleaning system, which immediately removes contaminants, can be considered a core essential technology for autonomous vehicles. Through Hyundai Motor Group's autonomous driving joint venture 'Motional,' it is expected to expand into global markets such as the United States, Singapore, and Australia. Motional is the only autonomous driving company partnered with vehicle-sharing platforms Lyft and Via, as well as the delivery platform Uber Eats, and plans to maximize robo-taxi operations through ride-sharing and autonomous delivery services based on the Ioniq 5.

Attention should be paid to DY Auto's new electric vehicle clients. DY Auto supplies rear wiper motors to Rivian, an electric vehicle company known as the second Tesla in the U.S. It is understood that DY Auto is the sole supplier (sole vendor) for Rivian. Rivian produced 1,015 vehicles and delivered 920 to customers last year, and announced plans to increase production to 200,000 units this year. Therefore, rapid sales growth of DY Auto is expected in line with Rivian's mass production expansion. Additionally, DY Auto has received orders and supplies steering motors to the U.S. electric vehicle startup Canoo, and based on its global electric vehicle electronic parts supply references, it is judged that expansion to Tesla, Apple Car, and others is highly likely.

DY's expected 2021 performance is projected at KRW 968.2 billion in sales (+22.7% YoY) and KRW 57.5 billion in operating profit (+37.9% YoY), while the expected 2022 performance is KRW 1.0859 trillion in sales (+12.2% YoY) and KRW 66.2 billion in operating profit (+15.1% YoY). These are very conservative estimates that do not reflect the sensor cleaning system's performance. Researcher Choi explained, "With the expansion of mass production volumes of new global electric vehicle companies, significant performance growth is expected from this year, and since the sensor cleaning system requires high-level technology and is expected to have a high selling price, profit margins are also expected to continuously improve."