Doosan Group stocks fly high on successful restructuring, strong growth potential

[Source: Doosan Group]

The stock price of Doosan Group companies continues to fly high on successful financial restructuring and robust earnings growth.

According to Korea Exchange on Tuesday, the combined market capitalization of five Doosan companies – Doosan, Doosan Bobcat, Doosan Enerbility, Doosan Fuel Cell and Oricom – came to 20.92 trillion won ($15.93 billion) as of Aug. 12, up about 14 percent from Jul. 1. The stock price rally continued this month. Doosan, the group’s holding company, gained 17.88 percent in the first two weeks this month. Doosan Enerbility and Doosan Fuel Cell added 13.07 percent and 24.32 percent, respectively.

On Wednesday morning, Doosan and Doosan Enerbility shares added 0.12 percent to 82,500 won and 1.42 percent to 12,500 won, respectively. Doosan Bobcat inched up 0.46 percent to 32,900 won, but Doosan Fuel Cell lost 0.61 percent to 40,650 won. Oricom jumped 3.80 percent to 6,830 won.

Behind the strong rise in Doosan Group stocks is regained growth momentum following improvement in financial health. After Doosan Enerbility, the group’s intermediate holding company, graduated from creditor management after fully complying with bailout terms from banks earlier than planned in March, Doosan Group has promptly transformed its business portfolio focusing on future-oriented growth engines such as renewable energy and nuclear power. Doosan’s debt-to-equity ratio was down to 166 percent in March from 327.7 percent at the end of 2019. This means its credit rating is upgraded and financial costs are lowered.

Doosan and its subsidiary Doosan Enerbility successfully overcame a liquidity crisis in two years through their aggressive sale of non-core business assets, and Doosan, together with Doosan Enerbility, Doosan Fuel Cell, and Doosan Bobcat, is exploring ways to grow with a focus on next-generation energy, machinery and semiconductors, said Kim Dong-yang, an analyst at NH Investment & Securities.

Investors are welcoming the group’s latest moves that helps enhance business performance of Doosan Group companies. Doosan reported an operating profit of 367.9 billion won for the second quarter ended June, surpassing market expectations by a wide margin. Doosan’s annual operating profit forecast for 2022 is revised to 1.08 trillion won, about 30 percent higher from the previous forecast of 826.4 billion won in June, according to FnGuide on Tuesday.

Doosan Enerbility and Doosan Fuel Cell are also drawing market attention as nuclear power and hydrogen are emerging as energy alternatives in the fierce competition for energy supplies from around the world. Doosan Enerbility is the only company in Korea that manufactures key equipment for nuclear power plants. Doosan Fuel Cell, which makes hydrogen fuel cells for power generation, is expected to benefit from subsidy programs in the Inflation Reduction Act recently passed by the U.S. Senate.

Construction equipment making unit Doosan Bobcat also posted better-than-expected results. Despite slowing demand in the North American market, Doosan Bobcat reported an operating profit that exceeded the market consensus by 121 percent in the second quarter. The company’s annual operating profit estimate for this year rose 19.5 percent to 769 billion won this month from 643.5 billion won in March.

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