SEOUL, Jan. 9 (Korea Bizwire) – Doosan Bobcat Inc., a construction equipment unit of Doosan Group, is forecast to earn solid earnings this year on the back of the incoming U.S. government’s massive infrastructure spending, analysts said Monday.
Doosan Bobcat made a strong market debut on the local stock market in mid-November by raising some 900 billion won (US$748 million) through an IPO, the second-largest IPO deal after Samsung BioLogics Co.’s 2.2 trillion-won market debut.
In 2007, Doosan Infracore acquired Bobcat and other construction equipment units from North Carolina-based Ingersoll Rand PLC for $4.9 billion.
Analysts said Doosan Bobcat is widely expected to benefit from U.S. President-elect Donald Trump’s proposed plan to spend massive amounts of money on infrastructure. The incoming U.S. administration plans to spend $1 trillion on infrastructure — tunnels, roads and ports.
“Doosan Bobcat generates some 70 percent of its revenues from the North American market and has maintained its top slot in the region’s compact construction equipment market over the past 50 years,” said Kim Hong-kyun, an analyst at Dongbu Securities.
The analyst said Doonsan Bobcat is forecast to earn $1.78 billion in revenue from the planned infrastructure spending.
Kim set a 12-month price target for Doosan Bobcat at 45,000 won citing upbeat earnings and its brand power.
Samsung Securities analyst Han Young-soo said Doosan Bobcat’s earnings will also improve through reduced financing costs and its stock price will get a boost from more shareholder friendly policies in store.
“Its largest shareholder Doosan Infracore will demand high dividend payouts in order to improve its own financial status,” Han said.
Aided by such optimism, foreign investors had continued to snatch up Doosan Bobcat since its market debut on Nov. 21.
Foreign ownership of Doosan Bobcat stood at 19.97 percent as of Friday, a sharp rise from the 17.37 percent on the day of market debut.
NH Investment & Securities said Doosan Bobcat’s market presence will be further increased on its diversified product portfolio.
“The company is moving to increase its sales in Europe and Asia, which will further jack up its market presence around the globe,” said Ryu Jae-hoon, an analyst at NH Investment & Securities.
Doosan Bobcat operates 31 subsidiaries in 20 countries.