Eugene Investment & Securities said on the 3rd that Doosan(000150) secured growth drivers without a heavy fundraising burden thanks to the announcement of acquiring SK Siltron. It maintained its "buy" (BUY) rating and raised the target price to 2.68 million won from 2.58 million won.
Researcher Lee Joo-hyung at Eugene Investment & Securities said, "Doosan signed a stock purchase agreement to acquire 70.6% equity in SK Siltron held by SK for 2.3 trillion won," and added, "SK Siltron will be nurtured as Doosan's core revenue base without a future listing, and it presented a goal of achieving 3 trillion won in revenue by 2031." Lee said, "The potential dilution of shareholder value from this acquisition is very limited."
As of the end of the second quarter this year, Doosan's separate-entity cash and cash equivalents stood at 1.68 trillion won, and the remaining loan limit was about 400 billion won. The firm said that if it uses the 2.5 trillion won acquisition financing arranged by the Korea Development Bank, it can sufficiently secure an additional 1 trillion won in funds and 1.5 trillion won to repay SK Siltron's borrowing fund.
It also analyzed the deal as very attractive from a valuation perspective. Assuming the remaining equity (29.4%) held by Chairman Chey Tae-won is acquired on the same terms, SK Siltron's expected EV/EBITDA for next year is about 8 times, which it said is undervalued compared with the global peers (Siltronic, GlobalWafers, SUMCO) average of 12.6 times.
Lee said, "If the transfer and acquisition procedures for SK Siltron are completed by the end of the first quarter next year, results will be reflected in Doosan's standalone business from the second quarter next year," adding, "We raise the target price to 2.68 million won to reflect the growth of the Electronics BG and the effect of consolidating SK Siltron."