On the 5th, KB Securities analyzed that Dong-A Hwasung is preparing for a leap in its hydrogen fuel cell business amid the growth of electric vehicles.
Dong-A Hwasung is a manufacturer of automotive/home appliance and industrial special rubber parts, with nine overseas subsidiaries. Last year's performance recorded sales of 349.6 billion KRW and operating profit of 14.4 billion KRW, representing a 21.1% increase and a 10.1% decrease compared to the previous year, respectively. Net profit increased by 17.1% to 15.4 billion KRW.
Lim Sang-guk, a researcher at KB Securities, stated, “Despite concerns about an economic downturn, both automotive and home appliance sectors recorded solid sales growth,” and analyzed, “In particular, increased operating rates at major overseas subsidiaries in India, China, and the United States led to top-line growth.”
However, researcher Lim noted, “Operating profit slightly declined due to issues with the Russian subsidiary and rising raw material costs,” and predicted, “This year will highlight momentum in electric vehicle and hydrogen fuel cell businesses along with profit margin normalization.”
Especially this year, quantitative and qualitative growth in the automotive sector, expansion of eco-friendly vehicle items, and growing expectations for hydrogen fuel cell system growth are anticipated.
Researcher Lim observed, “Major clients such as Hyundai Motor, Honda, and Nissan continue to see a gradual recovery in shipments,” and forecasted, “Steep growth at India plants 1 and 2, along with increased operating rates at overseas subsidiaries in the U.S. and China, will lead to performance growth.”
In particular, the Indian subsidiary is expected to emerge as a practical beneficiary of global supply chain diversification. Additionally, a technology usage royalty agreement (3.5% of sales) was signed with Indonesia’s PBR (PT. PUTRABANGUN RUBBERINDO, producing hoses and gaskets for 2-wheel and 4-wheel vehicles → supplying to Daihatsu automobiles), which could act as a positive momentum if the related market grows.
Furthermore, the expansion of eco-friendly vehicle production by major clients such as Hyundai Motor’s Ioniq series, Kia EV6, and Nexo is considered important. Dong-A Hwasung produces battery pack gaskets/seals for electric vehicles and intake/exhaust hoses for hydrogen vehicles. Currently, it supplies about 90% of Hyundai Motor’s battery pack gaskets.
Lastly, researcher Lim emphasized, “We focus on the growth potential of the 5kW-class building-use high-temperature polymer electrolyte hydrogen fuel cell system developed by Dong-A Fuel Cell,” explaining, “Since obtaining KC and KS certifications in 2021, demonstration operations (about 4,000 hours) are currently underway in the Czech Republic.”
He added, “Following demonstration and CE certification, expansion into Europe, the Middle East, and China is expected,” and anticipated, “With tightening carbon emission regulations, CE certification will mark the official start of the hydrogen fuel cell business and lead to a reevaluation of corporate value.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
