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Photo = Yonhap news |
[Alpha Biz= Paul Lee] KB Securities has lowered its target price for Doosan Fuel Cell from 25,000 KRW to 23,000 KRW, an 8% reduction, adjusting its future cash flow projections downward. However, the investment rating remains "Buy."
On the 10th, KB Securities explained, "The downward revision reflects the higher cost rate and the increased fixed cost burden due to the construction of new factories and staffing."
Doosan Fuel Cell's fourth-quarter results for the previous year significantly missed market expectations. Preliminary revenue showed a 125.1% increase compared to the previous year, reaching 261.6 billion KRW, but the company continued to experience operating losses of 2.6 billion KRW. The net loss for the period was 6.2 billion KRW.
KB Securities stated, "The operating profit/loss was far below consensus. Despite a significant increase in sales of fuel cell main equipment in Q4, amounting to 235.2 billion KRW, the company experienced operating losses due to an increased proportion of lower-priced CHPS sales, as well as rising cost rates due to some equipment replacements and repairs. Additionally, fixed costs, including depreciation and labor costs from the establishment of a new SOFC plant, contributed to the losses."
On a more optimistic note, KB Securities highlighted the potential of Doosan Fuel Cell's U.S. market entry via the integration of production plants and the start of SOFC plant mass production.
KB Securities added, "The key point of this announcement is the finalization of the value chain with U.S.-based HyAxiom. Previously, the company operated production plants in both the U.S. and Korea, with Doosan Fuel Cell handling sales in Korea and other regions, while HyAxiom handled sales in North America. However, it has now been decided to centralize global production operations under Doosan Fuel Cell."
As a result, KB Securities expects the company to expand its overseas markets, which were previously limited to China and Australia, to include the U.S. and Europe. With the increasing demand for fuel cells for data centers in the U.S., the firm expects Doosan Fuel Cell to enter this emerging market.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
