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Hwacheon Machine Tool

000850 · KOSPI · ₩000850 · 화천기공

₩34,950▲ ₩650 (1.90%)End-of-day · Oct 28, 2026 · End-of-day prices.
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Valuation model · Discounted cash flow (DCF)

We use a 5-year discounted cash flow: the value of the cash the business is expected to produce, in today's money.

Fair value per share

₩62,045

vs the current price (₩34,950)

Enterprise value
₩41B
Equity value
₩136B
WACC
7.1%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal. This is not financial advice.

Why the model and the price differ

The model is 78% away from today's price. A gap this size usually means the market expects something the past figures don't show yet, or the model leaves something out. What we can see:

  • To match today's price of ₩34,950, the model needs an operating margin of 0.3% every year (it uses 2.2%).
  • 63% of the last 12 months' net profit came from outside operations (stakes in other companies, interest, one-offs). The model adds those stakes at book value but doesn't project that income.
  • Today's P/E is 3.8× against a typical 7.5× over the last 10 years.

Treat the model as a starting point: change the assumptions to the story you believe, and compare with the multiples check below.

Bear / Base / Bull

Bear
₩41,370
+18.4%
Base
₩62,045
+77.5%
Bull
₩104,372
+198.6%

Bear: revenue growth 3 points lower every year, EBIT margin 2 points lower, WACC 1 point higher. Bull: the opposite.

Assumptions

Sign in to change the assumptions and see the results update. Sign in

Cycle options

Margin path

Every year uses the cycle-average margin (2.2%).

Revenue growth

  • -3.1%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-3.1% a year, annual reports), fading to 3% by year 5.

  • -1.6%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-3.1% a year, annual reports), fading to 3% by year 5.

  • -0.1%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-3.1% a year, annual reports), fading to 3% by year 5.

  • 1.5%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-3.1% a year, annual reports), fading to 3% by year 5.

  • 3%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-3.1% a year, annual reports), fading to 3% by year 5.

Business

  • 2.2%

    Operating profit as a share of revenue.

    Default: through-the-cycle average of the last 12 months and the last 5 annual reports' operating margins.

  • 27.5%

    Share of operating profit paid as corporate tax.

    Default: Korea's top corporate tax rate (25%) plus 10% local income tax.

  • 0.5%

    The non-cash cost of wearing out equipment, added back to cash flow (% of revenue).

    Default: not in the statements, so 80% of capital spending (most spending replaces equipment that wears out).

  • 0.6%

    Money spent on factories, equipment, software and other long-term assets (% of revenue).

    Default: average of the last 3 annual reports (cash flow statements; equipment and intangibles).

  • 40%

    Stock and unpaid customer bills, less unpaid supplier bills, as a % of revenue. Each year's extra revenue ties up this much more cash.

    Default: working capital (current assets less cash and deposits, minus current liabilities other than borrowings) as a share of revenue, averaged over the last 3 years.

Discount rate

  • 2%

    How fast cash flows keep growing every year after year 5.

    Default: about Korea's long-run inflation plus real growth.

  • 4.11%

    Yield on Korea's 10-year government bond: the return with almost no risk.

    Default: Korea Treasury Bond 10-year yield on 2026-10-28.

  • 0.6

    How much the share moves when the market moves: 1 means just like the market.

    Default: 105 weeks of weekly returns against KOSPI (official index); raw beta 0.08, adjusted toward 1 and kept between 0.6 and 2.0.

  • 5.5%

    The extra return investors want for owning shares instead of bonds.

    Default: a typical premium for Korean shares.

  • 5.61%

    The interest rate the company would pay to borrow.

    Default: the 10-year yield plus a 1.5% credit spread.

Starting point

Revenue (TTM to H1 2026)
₩247B
Net debt (borrowings and leases − cash and deposits)
₩6.7B
+ Stakes and investments
₩102B
Associates, long-term financial assets and deposits (book value)
Shares
2,200,000
Share price
₩34,950
Market cap
₩77B

TTM = trailing 12 months: the last four reported quarters added together. "TTM to H1 2026" is the 12 months up to the latest quarterly or half-year report (H1 = to the end of June). Year 1 grows from there.

Past years and projection

Grey columns are reported results from the annual reports (after-tax EBIT at the model's tax rate), so you can check the growth and margin assumptions against the past. Years 1–5 are the model.

FY2023FY2024FY2025Year 1Year 2Year 3Year 4Year 5
Revenue₩226B₩222B₩222B₩239B₩235B₩235B₩239B₩246B
Growth−7.5%−1.6%−0.2%−3.1%−1.6%−0.1%1.5%3.0%
EBIT₩4.6B−₩741M₩4.2B₩5.3B₩5.2B₩5.2B₩5.3B₩5.4B
EBIT margin2.0%−0.3%1.9%2.2%2.2%2.2%2.2%2.2%
After-tax EBIT₩3.3B−₩537M₩3.1B₩3.8B₩3.8B₩3.8B₩3.8B₩3.9B
+ Depreciation———₩1.2B₩1.2B₩1.2B₩1.2B₩1.2B
− Capital spending₩2.6B₩777M₩903M₩1.4B₩1.4B₩1.4B₩1.4B₩1.5B
− Working capital₩8.9B−₩26B₩454M−₩3.1B−₩1.5B−₩94M₩1.4B₩2.9B
Free cash flow———₩6.6B₩5.1B₩3.6B₩2.2B₩811M
Discount factor———0.9330.8710.8130.7590.708
Present value———₩6.2B₩4.4B₩2.9B₩1.6B₩575M

Terminal value ₩36B, worth ₩26B today: 62% of enterprise value. It assumes spending settles at 110% of depreciation once growth slows to the terminal rate.

Cross-check: what the market has paid before

For cyclical businesses, analysts check a DCF against the multiples the stock has traded at through past cycles. Price / book is the usual anchor for them: P/E looks highest at the bottom of a cycle, when earnings are smallest, and lowest at the top. The price each band would give today:

LowTypicalHigh
Price / book (book value ₩158,805 a share)Now 0.22×₩29,4800.19×₩34,9040.22×₩39,8810.25×
Price / earnings (last 12 months: ₩9,307 a share)Now 3.76×₩18,4611.98×₩69,7177.49×₩93,35010.0×
P/E on run-rate earnings (Q2 2026 × 4: ₩16,935 a share)Now 2.06×₩33,5941.98×₩126,8627.49×₩169,86610.0×

Low, typical and high are the 10th percentile, middle and 90th percentile of month-end multiples since 2021, each against the latest report out by then, per share at today's share count; loss years and P/E above 100 are left out. Run-rate earnings are one quarter × 4, not a forecast. Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Sensitivity

Fair value per share as two inputs change; the middle is the current case.

WACC ↓ · Terminal growth →1.0%1.5%2.0%2.5%3.0%
6.1%₩69,149₩67,633₩65,711₩63,215₩59,872
6.6%₩67,028₩65,534₩63,683₩61,346₩58,323
7.1%₩65,252₩63,804₩62,045₩59,872₩57,136
7.6%₩63,742₩62,354₩60,692₩58,677₩56,195
8.1%₩62,444₩61,120₩59,556₩57,689₩55,428

Now (TTM)

Market cap
₩77B
Enterprise value
₩84B
P/E
3.8×
P/B
0.2×
P/S
0.3×
EV/EBITDA
—
Dividend yield
3.7%

Over time (at each year end)

20252024202320222021
Price₩36,350₩26,450₩31,650₩30,650₩34,250
Market cap₩80B₩58B₩70B₩67B₩75B
P/E7.0×6.7×6.6×1.8×16.7×
P/B0.2×0.2×0.2×0.2×0.2×
P/S0.4×0.3×0.3×0.3×0.4×
EV/EBITDA—————
Dividend yield3.6%4.0%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Hwacheon Machine Tool3.8×0.2×0.3×—3.7%
Doosan Enerbility217.2×4.8×2.2×—0.0%
Hanmi Semiconductor87.4×26.0×35.2×78.7×0.4%
Jusung Engineering1,189.7×14.6×38.2×2,291.7×0.0%
Rainbow Robotics4,610.6×59.1×174.0×—0.0%
EO Technics47.5×6.9×11.6×—0.0%
Wonik IPS28.2×4.5×5.3×42.7×0.2%
Similar companies (median)152.3×10.7×23.4×78.7×0.0%

Calculated from end-of-day prices and filed financial statements. Not a recommendation. This is not financial advice.

Also known as: Hwacheon Machine Tool / 화천기공 / 000850 / KRX:000850

Source: KRX statistical information