[Edaily Reporter Shin Ha-yeon] On the 17th, Hana Securities assessed that #DNAutomotive is entering a phase where the rising enterprise value of its core subsidiary, DN Solutions, will be fully reflected, and issued a new “Buy (BUY)” investment recommendation with a target price of 60,000 won. This represents an upside potential of 34% relative to the current stock price.

Song Seon-jae, an analyst at Hana Securities, stated, “DN Solutions’ enterprise value has been steadily rising due to improved downstream demand and the effects of the acquisition of German machine tool manufacturer Heller,” adding, “As the likelihood of a dual listing has decreased, an environment has been created where this value can be fully reflected in DN Automotive.”

Analyst Song noted, “DN Solutions is a machine tool manufacturer with a high-profit structure, boasting an average operating profit margin of nearly 20% over the past three years,” and added, “Amid a recovery in market conditions, particularly in the Americas, it is also positive that the company is expanding its customer base into industries with demand for precision machining, such as aerospace, defense, and robotics.” He continued, “As the structure of downstream industries is diversifying from a focus on the automotive sector toward aerospace, defense, and robotics, we expect both growth potential and stability to improve.”

Hana Securities explained that DN Solutions’ new orders in the first quarter of this year reached 6531억 won, a 14% increase year-over-year, with orders from the Americas and China rising by 42% and 18%, respectively. In particular, the firm highlighted that the share of the aerospace and defense industries has expanded from the high teens in 2023 to the mid-20% range currently.

The potential for a turnaround at Heller, the German company acquired earlier this year, is also drawing attention. He assessed, “Heller’s recent poor performance was largely due to its high fixed-cost structure and a slowdown in market conditions, rather than a lack of technological competitiveness,” adding, “Financial burdens have been reduced through restructuring and a rights offering, and a turnaround in performance will be possible once cross-selling utilizing DN Solutions’ global dealer network begins in earnest.” He further explained, “While margin dilution is unavoidable in the short term, we view this as an investment in medium- to long-term upside.”

Furthermore, he noted that the likelihood of DN Solutions being relisted has decreased following the financial authorities’ tightening of regulations on dual listings, suggesting that the previous discount factors are being resolved.

Analyst Song said, “Until now, the key reason for DN Automotive’s undervaluation was concern over a dual listing with DN Solutions,” adding, “However, given the financial authorities’ stricter regulations on dual listings and DN Solutions’ improved financial structure, there is little incentive to push for a listing at all costs.” He went on to emphasize, “As the likelihood of a dual listing decreases, the rise in DN Solutions’ enterprise value will be fully reflected in DN Automotive’s stock price.”

He also projected that the company’s core automotive parts business would continue to grow steadily. Analyst Song noted, “Short-term performance in the battery (BTS) business may be somewhat sluggish due to tariff burdens and intensifying competition,” but added, “Once the expansion of the Ulsan plant is completed in 2026 and the new Busan plant begins operations in 2030, production capacity will expand significantly, boosting growth potential.”

He continued, “The tube business is maintaining stable profitability of over 10% based on its position as the world’s second-largest player and vertical integration of raw materials,” adding, “It will serve as a cash cow, providing steady cash flow.” He also emphasized, “The automotive parts business is simultaneously seeing a recovery in orders, an expansion of production capacity, and the generation of stable cash flow,” adding, “The value of not only DN Solutions but also our core business will continue to rise.”