Doosan Group to Cancel 12.2% of Treasury Shares, Double Electronics Production Capacity

[Financial News] Doosan Group is moving to strengthen shareholder returns and lay the foundation for medium- to long-term growth by canceling a large amount of treasury shares and expanding its Electronics Business Division. Daishin Securities said on the 21st that the Electronics BG's solid profitability would drive earnings through 2028, when the benefits of the investments are expected to materialize in earnest. It maintained its 'Buy' rating and target price of KRW 1.84 million.
Kyung-yeon Lee, a researcher at Daishin Securities, said in a report that day, "The cancellation of treasury shares is a decision that increases per-share value without cash outflows, while the expansion is a decision that will lead to sales growth after 2028."
At a board meeting on the 17th, Doosan Group decided to cancel 2,568,528 of the 3,201,028 treasury shares it held, excluding 632,500 shares reserved for employee compensation. The shares to be canceled represent 12.18% of the total shares outstanding. The scheduled date is October 2. Once the process is completed, the number of shares outstanding will fall from 21,083,335 to 18,514,807.
Reflecting the cancellation, Daishin Securities estimated earnings per share (EPS) based on the number of shares outstanding at KRW 38,360 this year and KRW 55,005 next year. These figures are 3.1% and 13.9% higher, respectively, than its previous estimates. This year's estimate reflects only part of the weighted-average effect based on the timing of the cancellation, while the impact will be applied for the full year next year.
The additional investment approved the same day for the Electronics Business Division amounts to KRW 968.4 billion. Of this, KRW 421 billion will be invested in South Korea and KRW 547.4 billion in the Changshu-based Chinese affiliate Doosan Electro-Materials. A separate KRW 182.4 billion capital increase for the local affiliate is not included in that amount. The investment period runs from September this year through December 2028.
This investment is in addition to the plan presented when the company announced its second-quarter results. It is intended to meet demand for 800G optical modules for artificial intelligence (AI) data centers and rising demand from existing AI accelerator customers. Once completed, production capacity is expected to reach approximately twice its current level.
Lee said, "Revenue from the new facilities will begin to be reflected from 2028 and will be fully reflected in 2029." He added, "On a separate-company basis, net borrowings stood at negative KRW 12 billion at the end of the second quarter, meaning the company was in a net cash position and had ample financial resources." He also noted, "Expansion during a period when both volumes and prices are rising is aimed at meeting demand that has already been confirmed," adding, "We believe high profitability will be maintained even after the expansion."

[email protected] Choi Do-sun Reporter