The average target price of 229640.KS is 44231 and suggests 30% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 58000.0. This translates into 70% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 27000.0. This is equivalent to 21% downside potential in the worst case. 

LS Cable & System Asia Ltd. manufactures and sells cables for the electricity boards and news agencies worldwide. It offers overhead wires; LV/MV and HV power cables; and communication cables comprising UTP, optical fiber, and shielding cables. The company was founded in 2015 and is headquartered in Anyang, South Korea. LS Cable & System Asia Ltd. is a subsidiary of LS Cable & System Ltd.

Korea

LS Cable & System Asia Ltd.

Industrials

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has been low and below its peers. On average, the company pays dividends twice a year. 

229640.KS reported revenue of KRW 868 966mn in the last 12 months, up 19% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 656% from FY23 to KRW 1 071.85. Market expects EPS to reach KRW 963.80 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 40ppts over past six months and grown 1ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 6.8% in the last 12 months, up from 5.1% in FY23. 

Historically, 229640.KS has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 3.7%, a growth from 0.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 7.2% in the last 12 months, an increase from 0.9% in FY23. The market analysts predict that RoA will be 17.2% in FY24, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 17.6%, above the peers. The consensus estimate for FY24 for RoCE is 302.5%, again ahead of the peers. 

LS Cable & System Asia Ltd. reported a return on equity (RoE) of 19.6% in the last 12 months, up from 2.9% in FY23. The market consensus projects an RoE of 48.6% in FY24, again ahead of its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.1 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

229640.KS has poor trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is very unstable and is unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, and weak debt servicing capacity. We note low margin volatility, among the positive credit factors. 

In highly turbulent market conditions, 229640.KS is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, 229640.KS is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from large to substantial. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

LS Cable & System Asia Ltd.

₩ 33100

3

LS Cable & System Asia Ltd.

₩ 33100

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₩ 33100

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