Doosan Bobcat raises target stock price on earnings surprise… KB Securities '92,500 won'

KB Securities believes that Doosan Bobcat’s first-quarter performance improvement exceeded expectations, leading it to raise its annual profit forecast and target stock price at the same time. After confirming that earnings beat market expectations, the company recalculated its profit forecasts for this year and next year, and raised its fair enterprise value accordingly.

On the 29th, KB Securities announced that it raised Doosan Bobcat’s target stock price from the previous 80,000 won to 92,500 won. Analyst Jeong Dong-ik said that Doosan Bobcat’s operating profit in the first quarter of this year was 207 billion won—more than 30% above market expectations—turning in a surprise performance. He explained that the rebound in demand in the main business divisions, along with the impact of higher sales prices, was reflected, and that the earnings improvement was also supported by exchange-rate effects brought by major currency strength, including the won-to-U.S.-dollar exchange rate.

By region, the recovery momentum is most pronounced in Europe and the Middle East. Sales in this region increased by 18.3% year over year, and KB Securities analysis said that this was influenced by the recovery in demand for small equipment and the strengthening of the euro. Sales in North America, its main market, also rose by 3.3%. Meanwhile, sales in Asia, Central and South America, and Africa likewise increased by 3.8%. The significance of this performance is that it is not only reliant on a particular region; rather, a balanced improvement trend is showing across multiple regions.

Reflecting this trend in the first quarter, securities firms raised their annual performance forecasts. This year’s operating profit forecast was increased by 10.5% from 695 billion won to 768 billion won, and next year’s forecast was also raised by 6.1% from 1.026 trillion won to 1.089 trillion won. Because securities firms’ target stock prices are typically calculated based on future profit forecasts, an upward revision to earnings expectations often directly results in an adjustment to the target stock price.

KB Securities assessed that even after the stock has risen recently, Doosan Bobcat’s PBR (price-to-book ratio) still remains at around 0.9 times. PBR is an indicator that shows the level of the stock price relative to the company’s net asset value; a ratio below 1 is usually interpreted as the stock being undervalued relative to asset value. This means that, as industry conditions improve and earnings recovery continues, the burden of enterprise value valuation is not yet heavy. If this trend continues—along with a sustained recovery in global construction equipment demand and stable exchange-rate conditions—it could lead to further upward revisions of earnings expectations.