Expected to Evolve into a Full-fledged Smart Farm Player
The author is an analyst of NH Investment & Securities. He can be reached at jack.baek@nhqv.com. -- Ed.
Daedong Corp has invested in smart farm and smart mobility businesses in addition to its farm equipment business. The company is forecast to evolve into a full-fledged smart farm player, backed by: 1) the smart farm business being prepared by wholly-owned subsidiary Jeju Daedong; and 2) driverless tractor development and R&D investment into a range of crops.
Smart farm business to begin
Through wholly-owned subsidiary Jeju Daedong, Daedong Corp plans to invest W50bn into a tourism complex (pre-sales project) and smart farm business on 695,000m2 of land in Aewol, Jeju Island. For the smart farm business, it is expected to hire employees experienced in smart farming (including the cultivation and harvesting of crops).
The first phase of Jeju Daedong’s smart farm business is to undertake smart farming and precision farming, develop and distribute natural ingredients, and demonstrate data services related to distribution. The second phase is to establish a smart farming-related platform through the attraction of investment in infrastructure on the Aewol land.
Smart farming on open land should pave the way for autonomous farming over the mid/long term. While Korea lags behind the US in adopting driverless tractors, Korea’s large farm equipment companies have made R&D investments in autonomous farm equipment. We expect the autonomous farm equipment sector to bloom in earnest from 2024.
Smart mobility business to pave the way for smart farm business over long term
Daedong Corp’s 2022 sales are forecast at W137tn (+16.4% y-y) and OP at W59.2bn (+55.0% y-y). While overseas sales are expected to rise on higher sales to North America, the direction of domestic sales is to hinge on the development of driverless tractors. The smart mobility business, which Daedong Corp is conducting via subsidiary Daedong Mobility, should offer an opportunity to accumulate know-how required to undertake autonomous farm equipment business further down the road.