Wednesday, April 8, 2020
Doosan Solus: Showing Clear Signs of Growth
Significant Growth Expected Going Forward
Doosan Solus: Showing Clear Signs of Growth
  • By John Ko
  • February 13, 2020, 16:04
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The author is an analyst at NH Investment & Securities. He can be contacted at -- Ed.


Considering both its robust growth potential and downstream industry (OLED/rechargeable batteries) dynamics, Doosan Solus looks to offer significant investment appeal. We estimate the combined operating value of the company’s main businesses at W961.5bn

Valuations to rise; mid/long-term growth momentum strong

We raise our TP on Doosan Solus from W24,000 to W31,000. The hike to our TP, despite adjustments to our profit estimates, is justified by: 1) a change in valuation period (for each business unit) from 2019 to 2020; and 2) an easing in the discount (by 10%p, from 20% to 10%) applied to the copper foil and battery foil businesses.

Going forward, the firm’s rising portion of OLED materials and battery foil business is expected to provide a strong boost to overall EV in two important ways. 1) Valuation expansion: As growing industries, the OLED and rechargeable battery industries are seeing supply and demand rise together. Considering the strong market positions of its clients, we believe Doosan Solus boasts significant business growth potential. 2) High earnings growth potential: With its business concentrated in growth industries, we expect the firm’s earnings leverage to expand going forward. Of note, the operating value of the company’s OLED materials + copper foil + battery elecfoil businesses is estimated at W961.5bn.

2020 outlook: OP to jump 24% y-y

We size Doosan Solus’s 2020E OP at W47.2bn (+24% y-y).

In 2020, earnings growth at the OLED materials business should sustain on the back of structural growth. We note that the firm boasts major OLED players (including Samsung Display) as customers, for whom global OLED market share (in terms of panel size) is projected to remain high (around 90%). Accordingly, prospects look rosy for the company’s OLED materials business.

In Europe, Doosan Solus’s capacity for battery foil production is predicted to balloon from 10,000 tons/year in 2020 to 55,000 tons/year in 2025. Going forward, Europe’s portion of global rechargeable battery production is estimated to increase from 13% in 2020 to 28% in 2025. As the only company in Europe currently close to producing battery foil, we expect Doosan Solus to enjoy significant growth going forward.