Golfzon Newdin Holdings
The author is an analyst for NH Investment & Securities. He can be reached at jack.baek@nhqv.com -- Ed.
At the top of the Golfzon Newdin Group governance structure, Golfzon Newdin Holdings appears excessively undervalued. While most pure holding companies hold stakes in listed players, unlisted firms (eg, Golfzon County, Golfzon Commerce) and real estate represent the majority of stake value for Golfzon Newdin Holdings.
Top of the Golfzon Newdin Group governance structure
Despite its NAV of W1.3tn, Golfzon Newdin Holdings has a market cap of only around W200bn. Trading at a 2022 P/E of 2.3x and P/B of 0.3x, the firm’s shares look excessively undervalued.
On a stake value basis, key subsidiaries of Golfzon Newdin Holdings are not Golfzon, but Golfzon County and Golfzon Commerce, for which combined stake value is larger than that for Golfzon. Golfzon Newdin Holdings’ stake ratio stands at 20.3% for Golfzon, while that for Golfzon County is 31.6% (on completion of conversion of preferred stocks held by MBK Partners) and 97.1% for Golfzon Commerce.
In general, most major subsidiaries of pure listed holding companies are also listed. In contrast, the major subsidiaries of Golfzon Newdin Holdings are unlisted, and accordingly, the holding company should enjoy a limited discount. That said, Golfzon Newdin Holdings is trading at an 83% discount to NAV (vs the average of 60%). Even considering the likely y-y slowdown in earnings growth this year at major subsidiaries, we view the shares as being excessively undervalued.
Steady growth momentum to sustain
The two main pillars for Golfzon Newdin Holdings’ future growth are: 1) the screen golf business; and 2) golf course operations. In particular, Golfzon County’s rising share of the golf course operation market should drive overall sales expansion. On improved communication with investors, the firm’s discount should gradually fade.