Doosan Infracore will likely benefit from the fast paced growth of China’s excavator market, NH Investment & Securities said on February 16, 2017. It has a rating of “buy” and a target price of 11,500 won maintained as in the past.
Yoo Jae-hoon, analyst with NH Investment & Securities, noted that “of the programs, the largest portion was taken up by urban construction projects which consisted of transportation, environment, and eco-friendly projects. The excavator market in China was 62,938 units last year, up 19 percent from the previous year and is set to increase to 75,000 units this year.”
Forecasts indicate that the Chinese excavator market is slated to grow continuously as the government and the private sector will increase its investments. A total of 11,260 private-public partnership programs valued at 2,295 trillion (US $2.02 trillion) won have been approved by the government as of the end of 2016. The implementation ratio achieved the 30% level late in 2016, growing to 31.6% from 19.6% in January, 2017.
It should be noted that, in 2016, Doosan Infracore sold 4,649 units of excavators in China, up 32 percent from 2015, with its Its share of the market moving up from 6.7% to 7.4% during the same time frame.
The company’s overall sales revenue for the 2016 fourth quarter was 1,375.5 billion won, which was 17.6% lower than the same period in 2015 with its operating profit turning to the black with 100.3 billion won. Due to the public listing of Doosan Bobcat as well as the 34-billion-won cost of restructuring, net profit showed a loss because of financial investors losing due to 108-billion-won losses of financial investors.
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