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JONBUR Research · Initiation

Daejoo Electronic Materials · 078600 · Electronic components

Daejoo Electronic Materials: Sharp Share Price Rally Against Thin Profits and Rising Leverage

Why this report

Start of coverage: one of the 300 largest companies, written once its financial statements were in.

Daejoo Electronic Materials (KOSDAQ: 078600) closed at ₩105,900 on 2026-10-12, up 63.2% over one year, with a market cap of about ₩1.6T. Trailing profits are modest (net margin 3.1%, ROE 4.0%), so the multiples are high (P/E 162.5, P/B 5.8) and no valuation model estimate is available.

Written Oct 13, 2026 · Data as of Oct 12, 2026 · 0 views

This is not financial advice. The report does not recommend buying or selling anything.

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Thesis

The data supports a story of growing sales: revenue rose from ₩174.1B in 2022 to ₩254.6B in 2025, and trailing revenue to H1 2026 is ₩328.7B. The share price has risen 24.6% in one month and 30.7% in three months, and one news headline (Edaily, 2026-10-13) links the stock to expectations around a SpaceX space data center supply chain. The data does not confirm any such business, so this remains a headline only.

The data does not support the idea that earnings have caught up with the price. Operating margin fell from 13.4% in 2024 to 8.1% in 2025 and the trailing figure is 8.1%. Net income of ₩10.1B on trailing basis is well below the ₩36.9B of 2024. Free cash flow is negative at ₩19.0B, and borrowings of ₩226.5B far exceed cash of ₩38.9B.

Business overview

The company is listed on KOSDAQ in the electronic components sector. It was founded on 1981-07-06 and listed on 2004-12-10, with 15,480,593 listed shares and two co-CEOs (임일지, 임중규). Market cap is about ₩1.64T and enterprise value about ₩1.83T. The price is 42.2% below its 52-week high of ₩183,300 and 79.8% above its 52-week low of ₩58,900. Details on products and customers are not in the data provided.

Financial analysis

All figures come from filed financial statements (DART). Revenue grew 16.1% in 2025 to ₩254.6B after 18.6% in 2024 (₩219.3B). Trailing revenue to H1 2026 is ₩328.7B.

Operating income was ₩20.7B in 2025 (8.1% margin), versus ₩29.4B in 2024 (13.4%) and ₩6.2B in 2023 (3.4%). Net income was ₩20.7B in 2025 and ₩36.9B in 2024; trailing net income is ₩10.1B (3.1% margin). ROE was 19.3% in 2024, 8.6% in 2025 and is 4.0% trailing.

Liabilities to equity are 138.4%. Borrowings are ₩226.5B, cash ₩38.9B, and trailing free cash flow is -₩19.0B. Filings in May 2026 mention derivative trading losses, and a June 2026 filing concerns acquiring convertible bonds before maturity; the amounts are not in the data.

Valuation

At the current price the P/E is 162.5, P/B 5.8, P/S 5.0 and dividend yield 0.1%. EV/EBITDA is not available. At the end of 2025 P/E was 47.6 and P/B 3.9, so both multiples have risen since, with P/E far higher because trailing earnings fell.

Listed comparison companies show P/E of 17.1 (LG Innotek) to 110.2 (Samsung Electro-Mechanics) and P/B of 1.8 to 10.9. Daejoo's P/E is above all five, while its P/B of 5.8 sits in the middle of the range. Those companies are much larger by market cap.

The valuation model estimate per share (fair_value_model) is not available, so no model estimate can be compared with the ₩105,900 price.

Catalysts

  • The Edaily headline on 2026-10-13 about SpaceX space data center expectations shows that market sentiment is tied to a possible supply chain entry, which the filings do not confirm.
  • Repeated 5%+ holding reports (2026-05-29, 07-01, 08-07, 10-02) show changes in major shareholder positions that could matter for the share register.
  • The H1 2026 report filed on 2026-08-14 provides the latest earnings base, and the next periodic report will show whether margins recover.
  • A stock option grant filing (corrected, 2026-07-29) and an insider shareholding report (2026-08-11) are recent governance items.
  • The convertible bond early acquisition decision (2026-06-17) and conversion requests (2026-06-01) may affect share count and debt.

Risks

  • Trailing P/E of 162.5 rests on net income of only ₩10.1B, leaving the price sensitive to any disappointment in earnings.
  • Operating margin has dropped from 13.4% in 2024 to 8.1%, and net income has declined sharply from its 2024 level.
  • Negative free cash flow of -₩19.0B and borrowings of ₩226.5B against cash of ₩38.9B raise financing risk.
  • Derivative trading losses were disclosed in May 2026, and the data gives no amounts or details.
  • Price gains of 24.6% in one month appear linked to a news theme, and investor flow, foreign ownership and short balance data are not available to assess who is buying.

Closing view

The data shows a company with growing revenue and a strongly rising share price, but with weaker margins, low returns, negative free cash flow and a sizeable debt load. Valuation multiples are high compared with its own recent history and most listed comparison companies, and no model estimate is available to anchor them. The space-related headline is unconfirmed by filings. Investors should weigh the revenue growth against thin profitability and consider that key data on flows and ownership is missing.

Model estimate of fair value

The valuation model has no estimate for this company yet (not enough data, or no positive value with the base case).

Filings and data used

Report history

  1. Oct 13, 2026InitiationStart of coverage (300 largest)Daejoo Electronic Materials: Sharp Share Price Rally Against Thin Profits and Rising Leverage

Built only from jonbur's own data: prices and investor flows, filed financial statements and filings, and news headlines. Disclosed (filed) data is labelled as such. Written by AI and may contain mistakes.

This is not financial advice. The report does not recommend buying or selling anything.

Source: KRX statistical information