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Doosan Infracore rallies on hope for new investor

(Yonhap)
(Yonhap)

Shares in Doosan Infracore Co., the construction equipment affiliate of South Korea's cash-short Doosan Group, traded higher for a second day on Wednesday as its parent is seeking to sell a stake in the company.

On Tuesday, Doosan Infracore soared by the daily permissible limit of 29.86 percent to close at 7,480 won ($6.16), hitting a 52-week high as retail investors bet that the stake sale will boost Doosan Infracore's value going forward.

Doosan Group said earlier it will dispose of a 36.27 percent stake in Doosan Infracore held by Doosan Heavy Industries & Construction Co.

The country's largest construction equipment maker closed at 8,010 won, up 7.09  percent from the previous session, after rising as high as to 8,340 won.

The sale of Doosan Infracore is as part of Doosan Group's self-rescue measures worth some 3 trillion won.

Market watchers said the deal could fetch between 600 to 800 billion won. Credit Suisse will reportedly arrange the deal as a sales manager.

Observers, however, have been pessimistic about the sale of the stake in Doosan Infracore, maintaining their investment recommendations at "HOLD," which means there are no positive leads to move up share prices.

They predicted it will be difficult for the group to find a buyer for Doosan Infracore in the near future due to a lack of viable investors.

Doosan Infracore will benefit from a rebound in the Chinese excavator market in the current quarter, market watchers said.

"Increased sales of excavators in China will help improve Doosan Infracore's earnings in the April-June period," said Kim Hong-kyung, an analyst at DB Financial Investment Co.

Sales of Doosan Infracore's excavators started rising in April in China on the back of a rebound in the Chinese property market and delayed demand caused by the coronavirus pandemic, a turnaround from a fall in the first three months of the year compared with the same period.

Its sales of excavators came to 3,239 units in April, up 80 percent from a year earlier, and nearly doubled in May to 2,166 units. (Yonhap)
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