LS Securities on the 17th said expectations are high for a corporate structure overhaul at DAEYANG Electric. It maintained a Buy rating and kept the target price at 40,000 won. DAEYANG Electric's previous closing price was 27,250 won.
DAEYANG Electric in January announced a plan to enhance shareholder value by consolidating unlisted DAEYANG Electronics as a subsidiary. For now, it is highly likely to be consolidated as a 100% subsidiary. DAEYANG Electronics is a related party in which the CEO of DAEYANG Electric holds 95.8% equity and engages in the distribution of marine lighting.
Jeong Hong-sik, an analyst at LS Securities, said, "If DAEYANG Electronics is consolidated as a subsidiary of DAEYANG Electric, consolidated results will rise."
DAEYANG Electronics' revenue gradually increased to 10.1 billion won in 2022, 12 billion won in 2023, 14.5 billion won in 2024, and 16.7 billion won in 2025. Operating profit also came in at 2.7 billion won in 2023, 3.1 billion won in 2024, and 3.9 billion won in 2025.
LS Securities analyzed that, if DAEYANG Electronics is consolidated, it will be a driver for higher consolidated results at the level of 16.7 billion won in revenue and 3.9 billion won in operating profit.
Jeong said, "DAEYANG Electric's estimated operating profit for 2026 does not reflect this for now, and we plan to apply it after it is finalized as a consolidation target going forward."
Per-share dividend (DPS) also could rise. DAEYANG Electric currently holds net cash of 114.3 billion won, and its cash flow is seen as solid, with 2025 EBITDA of 32.7 billion won versus an average capital expenditure (capex) of 7.9 billion won over the past three years.
Jeong said, "Even so, DAEYANG Electric's DPS is at a low payout ratio, from 100 won in 2024 to around 200 won in 2025," adding, "However, as it is moving to enhance shareholder value through a corporate structure overhaul and expanded shareholder returns, the likelihood of higher DPS and treasury share cancellation appears high going forward."