"CJ Olive Young, Blocked From Listing, Could Lift CJ Group's Share Price" Target Price Set at 230,000 Won... Doosan's Electronics BG Surges on Semiconductor Boom... [Stocktopia]

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[The Financial News] Here is a roundup of major brokerage reports for the morning of May 19.
Doosan Group has received new coverage with a target price of 2.45 million won as the Electronics BG division, which handles copper clad laminate (CCL), is expected to post rapid growth amid the semiconductor boom.
Although CJ Group posted an earnings shock in the first quarter, analysts said the stricter dual-listing rules have increased the likelihood that the strong performance of its unlisted subsidiary Olive Young will be directly reflected in CJ Group's share price. Orion Corporation is also expected to see margin spread improve from the second quarter, helped by seasonal demand and easing raw material costs as cacao prices fall.
\r\n\r\n◆Doosan Group (000150)— Korea Investment & Securities / Researcher Lee Na-ye
- Target price: 2.45 million won (new) | Previous close: 1.593 million won
- Investment opinion: Buy
Korea Investment & Securities initiated coverage on Doosan Group with a target price of 2.45 million won and a Buy rating, saying the Electronics BG division, which produces copper clad laminate (CCL), a key material for high-performance semiconductors, is expected to grow rapidly.
In the first quarter, Electronics BG posted sales of 617.3 billion won, up 53.3% from a year earlier, while operating profit rose 59.9% to 185.6 billion won, pushing its operating margin above 30%. The group's energy portfolio, including Doosan Enerbility's gas turbines and small modular reactors (SMR), was also cited as a factor supporting valuation.
Researcher Lee Na-ye emphasized, "The increase in demand across the entire CCL product range, along with proven competitiveness in high-value-added products for major customers, is a key investment point that signals Doosan's long-term growth potential."
She added, "Doosan does collect trademark royalties from its subsidiaries, but the amount is less than 30 billion won a year, so it is not large, and dividend income is also small. It is no exaggeration to say that the entire operating value comes from Electronics BG." In other words, since most of Doosan's operating value comes from Electronics BG, the competitiveness of this division is effectively the company's value itself.※ CCL (Copper Clad Laminate)This is the most basic material used in printed circuit boards (PCBs), made by pressing a thin copper foil onto an insulating resin board. Nearly all PCBs start from this base material, and high-performance semiconductor package substrates require more demanding, high-value-added CCL, which only a handful of companies such as Doosan can mass-produce.
\r\n\r\n◆CJ Group (001040)— SK Securities / Researcher Choi Gwan-soon
- Target price: 230,000 won (maintained) | Previous close: 170,300 won
- Investment opinion: Buy
SK Securities maintained its target price of 230,000 won and Buy recommendation for CJ Group, saying that despite the first-quarter earnings shock, the recently introduced dual-listing regulations have made it more likely that the value of unlisted subsidiary CJ Olive Young will be reflected in CJ Group's share price.
Researcher Choi Gwan-soon said, "As the government's dual-listing regulations have recently been tightened, making a listing less likely, the chances that Olive Young's strong performance will be transferred to CJ Group's share price have increased." He added that Olive Young's value, which had previously been dispersed by expectations of a separate listing, can now only be accessed through CJ Group because that path has been blocked by regulation.
He also said, "Last year, Olive Young paid out a total dividend of 170.4 billion won, including an interim dividend, and as earnings improve, the likelihood of a higher dividend is rising, which should also boost CJ Group's dividend income." He added, "CJ Group's separate dividend payout ratio last year was 82%, so shareholder-friendly returns are also positive."※ Dual listingThis refers to a structure in which a parent company and its subsidiary are both listed on the stock market, allowing the same business value to be evaluated in two places. Because this can dilute the value of the parent company's shareholders through a subsidiary's spin-off listing, the government has recently tightened regulations. If a separate listing is blocked, as in Olive Young's case, the subsidiary's value can flow directly into the parent company's share price.
\r\n\r\n◆Orion Corporation (271560)— Shinhan Securities / Researcher Jo Sang-hoon
- Target price: 160,000 won (maintained) | Previous close: 136,200 won
- Investment opinion: Buy
Shinhan Securities maintained its target price of 160,000 won and Buy rating for Orion Corporation, saying the company continues to post stable sales growth across all global regions.
Researcher Jo Sang-hoon said, "Although sales growth slowed over the past two years and the stock price also weakened, this year we expect a recovery in both sales growth and the share price, supported by a successful peak season and stronger product and channel competitiveness."
He also noted that cacao prices, which exceeded $10,000 per ton last year, have fallen to around $3,200 this year. "From the second quarter, the easing of raw material cost pressure will begin to be fully reflected, and margin spread improvement will emerge," he said.
He added, "If growth in the India and United States subsidiaries and expanded exports to Eastern Europe, the Middle East, and Africa become visible, a move into a premium valuation range is also possible," raising expectations for a future re-rating.※ Margin spreadThis is a profitability indicator that shows the difference between a product's selling price and the cost of raw materials, indicating how much profit a company keeps from each sale. When raw material prices fall or selling prices rise, the spread widens and operating profit increases. For Orion Corporation, the plunge in cacao prices from $10,000 per ton to $3,200 has become a decisive tailwind.
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sms@fnnews.com Sung Min-seo Reporter