[Click eStock] "Jogwang Paint, Expecting Equity Method Gains from Jogwang Yoturn Growth"

ResearchAlum forecasted on the 1st that Jogwang Paint will benefit from the increase in domestic shipbuilding orders. They suggested a target stock price of 11,500 KRW.

Researcher Choi Seonghwan from ResearchAlum explained, "With the continuous rise in new ship prices and the surge in shipping freight rates, orders are increasing not only for LNG carriers but also for container ships," adding, "We expect an expansion of the upstream market due to domestic shipbuilders' entry into the overseas naval ship after-service market."

He continued, "Although market share in the marine coatings market varies by company," he added, "Considering annual sales, Jogwang Yoturn is estimated to hold about 29% market share."

He analyzed, "Demand for marine coatings correlates with shipbuilding volume," and "Marine coatings account for about 3-5% of the shipbuilding cost." He further noted, "The higher the ship cost, the more the coating cost tends to increase," and "The painting process occurs about two years after the ship order."

Researcher Choi emphasized, "Due to increased orders since 2021, Jogwang Yoturn's performance improved in 2023," and "the current shipbuilding industry situation, where shipyards are fully booked and selective orders are being made, can be seen as a signal of performance improvement."

This year, Jogwang Paint is estimated to achieve sales of 248.1 billion KRW and an operating profit of 4.5 billion KRW. Sales are expected to decrease by 1.9% compared to last year, while operating profit is projected to increase by 21.6%. Net profit is anticipated to rise by 202.1% from last year, reaching 14.5 billion KRW. Researcher Choi analyzed, "We expect profitability improvement due to recognition of large equity-method gains from Jogwang Yoturn's performance improvement and stabilization of raw materials."