[Click eStock] Inseon ENT Shows Rebound "Target Price Raised"

[Asia Economy Reporter Lee Seon-ae] Shinhan Financial Investment announced on the 31st that it maintains a buy rating on Inseon ENT and raises the target price to 14,000 KRW. It believes there is a 37.3% upside potential compared to the current stock price (as of the 30th). The reason for raising the target price is the clear mid- to long-term direction and successful vertical integration. The target price was calculated by applying a target price-to-earnings ratio (PER) of 19.6 times to the expected earnings per share (EPS) of 700 KRW in 2022.

Senior Researcher Oh Kang-ho emphasized, "The business portfolio is diversifying," adding, "It is time to focus on the expansion of waste volume and portfolio diversification including automobiles and intermediate processing."

First, due to the limited supply characteristic of the industry, landfill prices (P) are rising, and the quantity of waste (Q) is increasing due to changes in consumer paradigms, inevitably increasing the role of private processing companies in intermediate processing. This is why structural growth is expected. Accordingly, construction waste sales in 2022 are expected to increase by 17% year-on-year to 140.8 billion KRW.

The success of vertical integration in the business model is also noteworthy. The value chain has been completed from structure demolition, collection, transportation, intermediate processing, production, incineration, to landfill. Including Yeongheung Industrial Environment, which is responsible for construction waste intermediate processing and incineration, strengthening existing businesses such as Paju B&R and Inseon Motors, as well as expanding the automobile business portfolio, is positive. Automobile recycling sales in 2022 are projected to increase by 9% to 94.4 billion KRW.

Meanwhile, second-quarter sales recorded a 1% increase to 64.1 billion KRW, and operating profit decreased by 7% to 10.2 billion KRW. This was in line with the previous estimate of 9.8 billion KRW operating profit.