[Click eStock] "DK Lock, Structural Growth Begins... Stock Undervalued"

On the 8th, KB Securities analyzed that structural growth has begun for DK Lock and that the current stock price is in an undervalued range.

DK Lock is a manufacturer of fittings and valves for metering devices. It produces key components installed in industrial facility piping for industries such as oil refining/chemicals, CNG/LNG, semiconductors, hydrogen industry, and aviation. In the first quarter of this year, it recorded sales of 27.6 billion KRW and operating profit of 4.5 billion KRW, marking increases of 28.2% and 2524% respectively compared to the same period last year. Net profit turned positive at 5.1 billion KRW.

Im Sang-guk, a researcher at KB Securities, stated, “Despite the global economic slowdown, growth in the oil and gas industry continued, resulting in very favorable performance due to customer diversification and product mix improvement,” and added, “Sales of 139 billion KRW, operating profit of 19.6 billion KRW, and net profit of 16.4 billion KRW are expected this year, marking record-high performance.”

Compared to the expected record-breaking performance this year, the current stock price is analyzed to be significantly undervalued at a price-to-earnings ratio (PER) of about 6.4 times.

Researcher Im forecasted, “Growth in North America, Europe, and the Middle East regions (due to changes in the energy business structure and eco-friendly trends) will continue, with large customer acquisitions and high-margin product supply contracts following,” and “Sales in the North American and Middle East/Asia markets are expected to increase sharply from 26.1 billion KRW and 24.5 billion KRW last year to 36.5 billion KRW and 39 billion KRW this year, respectively.”

DK Lock is currently the top domestic compatible fitting supplier for the global No. 1 company, US-based S Corporation, and is on a growth trajectory by responding quickly to customer demands for delivery. It is said to be benefiting significantly from substituting the global S company in Russia.

He also said, “Supplying fittings for semiconductor equipment and developing related new products (benefiting from localization, consumable parts with a replacement cycle of about 8 months) are expected to act as future growth drivers,” adding, “Sales are increasing as a vendor for company H, and registration and supply to partners such as S Corporation are underway.”

Furthermore, he noted, “The green economy product lineup, including hydrogen electric vehicles, hydrogen charging stations, and LNG bunkering equipment, is also attractive,” and forecasted, “Especially, growth in the US NGV (Natural Gas Vehicle, vehicles converted from diesel to bio-renewable gas mainly used for commercial vehicles with nearly zero CO2 emissions) market will act as a momentum.”