Daishin Securities “Doosan depends on sales price and product composition until expansion… Target price ↓”

Daishin Securities analyzed on the 10th that the production facilities of the electronics division of Doosan [000150] are already operating at full capacity, and that until expansion, growth depends on product sales price and product composition (mix), not volume.

The investment opinion of 'buy' was maintained, but the target stock price was lowered by 47.7% to 1.03 million won, reflecting the average corporate value multiple of compared companies and changes in Doosan Energy's share value. Compared to the previous day’s closing price of 611,000 won, the upside potential is 68.6%.

Lee Gyeong-yeon, a researcher at Daishin Securities, explained, "The stagnation of the margin in the 30% range is due to the exhaustion of operating rate leverage due to the electronics business division (Electronics BG) operating at full capacity," and explained, "Until capacity expansion, growth depends on sales price and mix, not volume."

Doosan's consolidated sales in the third quarter were KRW 5.4269 trillion, up 22.2% from a year ago. Operating profit increased by 98.4% to 459.4 billion won, but fell below market expectations (consensus).

Despite Doosan's own strong performance, its operating profit was below expectations, largely due to the influence of its affiliates. Its own business achieved the highest quarterly performance with sales of 892.2 billion won and operating profit of 237.9 billion won. In particular, Electronics BG sales increased 82.3% to KRW 802 billion, and operating profit was KRW 235.3 billion. 57% of Electronics BG sales in the third quarter were for network boards (32% for AI accelerators) and 10% were for optical modules.

Researcher Lee explained that the increase in raw materials is also linked to the selling price, so the unit price and mix increase performance.

On the other hand, the decrease in Doosan Energy sales (KRW 408.1 billion) and Doosan Bobcat operating profit (KRW 124.3 billion) offset the increase in its own business.

Daishin Securities predicted that the growth of Electronics BG next year will be led by copper clad laminate (CCL) and optical modules for artificial intelligence (AI) accelerators. It is predicted that optical modules will reduce the number of 400G products, which are currently the main products, and will be reorganized to focus on 800G and 1.6T. Electronics BG sales next year are estimated to be 3.4424 trillion won, an 18.3% increase from this year. The operating profit estimate for 2027 was set at 2.438 trillion won, 6.4% lower than before.

Researcher Lee said, “The future stock price variable will be the capacity expansion schedule and the speed of mix improvement in the meantime, rather than demand.”