SEOUL, Oct. 1 (Korea Bizwire) – The after effects of Daewoo Shipbuilding & Marine Engineering Co.’s financial troubles are continuing.
After a three trillion won loss in the second quarter was reflected in the company’s books, its shares plummeted. But as DSME’s third quarter performance is also expected to be troubling, financial analysts are lowering their target prices for the company’s stock.
On September 30, NH Investment & Securities Co., Ltd. lowered its target stock price for DSME from 20,000 won to 7,000 won, reporting the possibility that additional insolvencies could be found during management’s execution of due diligence.
Speaking of a more real phenomenon that shows the financial problems Daewoo is facing, it is said that the company’s Chuseok (Korean Thanksgiving) bonuses were cut, and a delay occurred in the payment of wages for the first time in decades.
Making matters worse, a group of 119 minority shareholders even filed a class action suit against DSME, demanding 4.1 billion won (US$3.47 million) in compensation for losses from an investment made based on the company’s doctored financial statements.
Shares of Daewoo Shipbuilding & Marine Engineering tumbled 30 percent to 8,750 won on July 15 after reports of its financial fraud first surfaced in the local media. This year, Daewoo’s shares have plunged 66 percent.
In the second quarter, the nation’s No. 2 shipyard posted a record loss due to increased costs from a delay in the construction of low-priced ships and offshore facilities.
DSME’s net loss stood at 2.39 trillion won in the April-June period, a sharp turnaround from a 76 billion-won profit during the same period a year earlier.
By Francine Jung (firstname.lastname@example.org)