[Click e-Stock] "Doosan Fuel Cell Completes Inventory Clearance in Q1... Profit Improvement Expected"

On May 2, Shinhan Investment Corp. maintained its "Buy" rating and target price of 23,000 won for Doosan Fuel Cell, stating, "The company has eased the burden on its top-line growth, but the pressure on profitability has increased. The extent of quarterly profit improvement will have a significant impact on the stock price."

On this day, Choi Kyuhun, a researcher at Shinhan Investment Corp., said, "Investors are focusing on profit improvement. If significant top-line growth leads to maximized operating leverage, the valuation (the stock price relative to corporate value) burden is expected to ease," he explained.

In the first quarter of this year, consolidated sales and operating profit were 99.7 billion won and minus 11.5 billion won (a turnaround to a loss, with an operating margin of -11.6%), respectively. Choianalyzed, "It is positive that the main fuel cell equipment achieved 75 billion won in sales, which builds confidence that equipment sales can continue every quarter."

The issue is the significant loss. Choi noted, "While price declines due to the nature of the bidding market had an impact, the main factor was that high-cost inventory produced in 2023 was recognized as sales." He added, "Out of 51 units in inventory, 45 units have been delivered."

Regarding this year's performance, he forecasted, "Consolidated sales will increase by 39.8% year-on-year to 575.9 billion won, and operating profit will be minus 14.6 billion won (losses continuing, operating margin of -2.5%)." Sales of CHPS (Clean Hydrogen Power System) are expected to continue, and with sales to the United States, the main fuel cell equipment sales are projected to reach 449.9 billion won.

Choi stated, "From the second quarter, quarterly profit is expected to improve due to unpaid royalties (acquisition of intellectual property rights), improved product sales composition (higher proportion of models with lower cost ratios), and the effects of electrode internalization. However, for the solid oxide fuel cells (SOFC) that begin mass production in the third quarter, new orders large enough to offset related fixed costs will be necessary."

He added, "New orders are expected to be in the range of 100 to 150 MW. Depending on the sales of hydrogen buses scheduled for release in the second half of this year, it is also possible for the company to achieve top-line revenue in the 600 billion won range."