[Click e Stocks] "Doosan Fuel Cell, Slower Than Expected Growth in Scale... Target Price Down"

Target Price Revised Downward by 11% Compared to Previous Level

NH Investment & Securities on the 22nd downgraded the target price for Doosan Fuel Cell from 27,000 KRW to 24,000 KRW, citing a slower-than-expected pace of revenue growth. The investment rating was maintained at 'Buy.'

Researcher Jeong Yeonseung of NH Investment & Securities explained, "We lowered the target price by 11% compared to the previous estimate," adding, "This year’s revenue estimate was reduced by 27% to 508 billion KRW, and operating profit was sharply revised down to 19.3 billion KRW due to fixed cost burdens and the reflection of sales from low-profit products." He continued, "In the domestic market, fuel cell sales are expected to proceed as planned according to the general hydrogen power generation bidding market, but we factored in slower-than-expected progress in domestic fuel cell projects related to the Renewable Portfolio Standard (RPS) system and sales in China."

Doosan Fuel Cell’s first-quarter performance this year is expected to meet market forecasts, but the fuel cell segment is anticipated to experience sluggish sales. Researcher Jeong stated, "First-quarter revenue is expected to decline by 0.7% year-on-year to 49.6 billion KRW, and operating profit is projected to drop by 78% to 700 million KRW, reflecting results in line with market consensus (average securities firm forecasts). Sales from fuel cell manufacturing and delivery were weak, with revenue mainly from maintenance, resulting in continued fixed cost burdens," he analyzed.

There is an expectation of profitability recovery starting in the second half of the year due to increased fuel cell production. Researcher Jeong said, "The general hydrogen power generation bidding market could secure new orders of 100 megawatts (MW) annually, and an additional 30-40 MW of orders are expected through the clean hydrogen power generation bidding market and the Distributed Energy Special Act. Considering maintenance, annual domestic sales of at least 500 billion KRW are achievable," adding, "There is additional growth potential depending on overseas fuel cell exports, and from next year, when inventory of low-profit products normalizes, operating profit margin is expected to recover to around 6-7% in terms of profitability."