[Click e-Stock] "Sebang Battery's Improved Shareholder Return Policy Signals Undervalued Stock"

On November 28, Hana Securities analyzed that Sebang Battery's improved shareholder return policy indicates that the stock is undervalued.

Song Sunjae, a research analyst at Hana Securities, stated, "The core of this value enhancement plan is to raise the dividend payout ratio to 25%, and the company also plans to cancel 1% of its total shares." The company has set a target of achieving an average annual sales growth rate of 7% over the four years from 2025 to 2028, and also announced plans to maintain a return on equity (ROE) of over 10% through 2028.

Sebang Battery plans to strengthen profitability by expanding and optimizing its production lines based on growing industrial demand. In addition, the company will pursue technological advancement strategies such as expanding AGM products, developing high-performance new products, and enhancing competitiveness in the electric vehicle battery business. The company also aims to secure additional overseas distribution bases to increase its global original equipment market share, and to improve transparency and shareholder trust through enhanced investor relations communication.

The most notable changes are in the area of shareholder returns. Sebang Battery paid a dividend of 1,100 won per share in 2024, resulting in a payout ratio of 9.1%, but will raise this to 25% starting with the next fiscal year's settlement. Song explained, "The dividend per share for 2025, to be paid in April 2026, is expected to be about 2,400 won, which would represent an expected dividend yield of 3.7% based on the current share price." By canceling 1% (140,000 shares) of its treasury stock, the total shareholder return yield is projected to reach 4.2%.

Meanwhile, Sebang Battery's cumulative sales and operating profit for the third quarter recorded year-on-year changes of +8% and -19%, respectively. The battery module business was weak due to slowing electric vehicle demand, but the core battery segment benefited from improved product mix thanks to the expansion of AGM products. Although profitability was pressured by surges in base wages, raw material prices, tariffs, and exchange rates, these factors are expected to gradually ease.

Song emphasized, "Given the low price-earnings ratio (PER) in the 6x range and the improved shareholder return policy (higher payout ratio and treasury stock cancellation), the stock remains undervalued."