Hana Securities on the 4th said Doosan Bobcat's earnings are recovering as North American construction equipment demand has been increasing again since the second half of last year. It initiated coverage with a "buy" rating and a target price of 82,000 won. The previous trading day's closing price was 65,200 won.
Hana Securities assessed that Doosan Bobcat experienced a downcycle as total construction equipment sales in North America fell sharply for more than two years starting in the second half of 2023. Doosan Bobcat's sales of compact construction equipment and industrial vehicles are 73% concentrated in North America. Chae Un-saem, an analyst at Hana Securities, projected Doosan Bobcat's sales in the second half of this year at 4.7 trillion won, up 3.7% from a year earlier.
By region in dollar terms, it forecast North America (NA) at $2.38 billion, up 2.6%, and Europe, the Middle East and Africa (EMEA) at $530 million, up 5.0%. It also projected Asia, Latin America and Oceania (ALAO) at $270 million, up 0.6%.
Although North American demand faces uncertainty from tariffs and interest rates, consumer demand has remained stronger than expected, Chae said. With North American construction equipment sales falling for two straight years and the base now lower, Chae viewed this as a sign that market demand is bottoming.
Chae Un-saem, an analyst at Hana Securities, said, "Starting in the second half of last year, North American construction equipment demand entered a recovery, and the industry is passing through the bottom," adding, "Because North American dealers' inventories are lower than in the past due to uncertainty from tariffs and high interest rates, even a modest improvement in the industry could drive a flexible increase in earnings."
However, Chae projected that tariff burdens could increase from before due to changes in how tariffs are imposed under Section 232 of the Trade Expansion Act in the United States.
Chae said, "Given the industry-wide trend of list price hikes, concerns related to Section 232 of the Trade Expansion Act are limited," adding, "Over the medium to long term, attention should be paid to interest rate changes that could strengthen the pace of recovery in the North American construction equipment industry."