On the 23rd, KB Securities analyzed that Cheil Technos has been recording surprise earnings consecutively, while its stock price remains significantly undervalued.
With 50 years of business experience, Cheil Technos primarily operates in construction materials centered on deck plates and steel processing for shipbuilding. As of the third quarter of 2023, the sales ratio by business division is 70% for construction and 26% for shipbuilding.
In the third quarter of this year, it recorded sales of 60.3 billion KRW, operating profit of 10.2 billion KRW, and net profit of 7.2 billion KRW. Operating profit and net profit increased by 108.8% and 1290.4%, respectively, compared to the same period last year.
Researcher Sang-guk Lim of KB Securities stated in the report on the same day, “It is a series of surprise earnings,” and analyzed, “Despite the slowdown in the construction market, the expansion of niche plant factories such as APT-type factories, semiconductors, and secondary batteries, as well as product price increases, are the main factors behind the strong performance.”
Researcher Lim said, “This year, in addition to the existing construction sector, record-high earnings are expected due to increased orders for new plants such as semiconductors and secondary batteries and product price hikes,” and judged that “the current stock price is at a price-to-earnings ratio (P/E) of about 3.0 times based on this year’s expected earnings, representing a significantly undervalued range compared to the market.”
Furthermore, there is an analysis that the company will benefit indirectly from the spotlight on the ‘Muryangpan construction method’ issue and that the mid- to long-term demand outlook for deck plates is bright. He forecasted, “If the column-type structure, which replaces the Muryangpan structure, becomes activated in the future, the application of deck plates will expand even more.”
He added, “The issue of business suspension related to rebar and concrete construction work will have minimal impact on performance due to the temporary suspension of the relevant business in the future.”
He also suggested the possibility of orders for nuclear power plant deck plates. He said, “HI-deck and KEM-deck are decks for nuclear power plants and have excellent references, such as supplying about 90% during past domestic nuclear power plant construction,” and predicted, “Since safety has been proven, HI-deck is highly likely to be applied to SMR deck plates in the future.”
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