Doosan Robotics to Turn to Profit in 2023
The author is an analyst of NH Investment & Securities. He can be reached at dongyang.kim@nhqv.com. -- Ed.
Doosan Corp’s liquidity issues have been successfully addressed. Moving ahead, growth potential should strengthen for the firm on stable in-house business (led by electronics), recognition of Tesna earnings, and the rapid growth of unlisted subsidiaries. Strengthened shareholder return policy is also expected. Doosan Corp shares are currently trading at a 64% discount to NAV.
Rapidly-growing Doosan Robotics to turn to profit in 2023
With the sale of assets and businesses, Doosan Corp and Doosan Enerbility (formerly Doosan Heavy Industries & Construction) have successfully addressed their liquidity issues. Backed by such affiliates as Doosan Enerbility, Doosan Fuel Cell, Doosan Bobcat, and newly acquired Tesna (39.8% stake), Doosan Corp looks set to achieve growth centered on next-generation energy, machine, and semiconductor businesses.
The firm’s three rapidly growing unlisted subsidiaries (DLS (logistics), Doosan Robotics (collaborative systems), and DMI (drone fuel cells/power packs)) are anticipated to turn to profit in 2023. Doosan Robotics (90.9% stake, book value of W86bn), Korea’s largest and a world top-5 manufacturer of collaborative robots (including cobots; robots that can physically interact with people), kicked off accelerated growth in 2020 by expanding its lineup to 10 models.
Doosan Robotics aims to secure sales of W78.8bn (+113% y-y) and a quarterly turn to profit in 2022, as it continues to expand its overseas efforts and lock in sales agreements, with more than 70% of exports headed to the US and Europe. At end-2021, the business was valued at W400bn amid the raising of external funds.
3Q22 preview: In-house earnings remain healthy, and rapid growth continues at unlisted subsidiaries
Doosan Corp should log 3Q22 sales of W4.3tn (+14% y-y) and OP of W303.8bn (+17% y-y). For in-house businesses (including overseas ICT and electronics subsidiaries), 3Q22 OP is forecast at W36.8bn (+34% y-y).
At the in-house electronics domain, impacts from rising costs (eg, increasing raw material prices, labor costs, and logistics expenses) and global economic slowdown are to be at least partially offset by: 1) a widening sales portion of high value-added products for semiconductors and 5G networks; 2) expanding EV and energy materials business; and 3) favorable forex rate effects. Among its three unlisted subsidiaries (for which sales growth reached 99% y-y in 1H22), Doosan Robotics is expected to reach BEP on the brisk expansion of the collaborative robot market. In addition, full-quarter reflection of earnings at Tesna, a subsidiary acquired in May, are set to begin.