April 19, 2024

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[THE INVESTOR] There will be no need to fret over overhang issues as Doosan Infracore sells partial stake in its US affiliate, said KB Investment and Securities on Dec. 3 maintaining a “buy” recommendation and 45,000 won (US$40.32) target price. 

It has sold 4.3 percent stake for 141.9 billion won in Doosan Bobcat, and now holds 51.05 percent. In August, Doosan Heavy Industries and Construction sold its entire 10.6 percent stake to financial institutions. Considering that major shareholders have completed sale of their stake and the group is still majority stakeholder, concerns over overhang issues are unwarrented, said analyst Cheong Dong-ik.

Its current stock price amply reflects short-term distress from block deals, and is relatively attractive. Refinancing, upgraded credibility rating and early repayment of borrowings will shrink its net interest cost to 54 billion won from 2016’s 87 billion won, and 46 billion won next year. In addition, its earnings to dividends will rise to 900 won this year, the highest in the industry, he pointed out.

By Hwang You-mee (glamazon@heraldcorp.com)