Ask Warren

Songwon Industrial

004430 · KOSPI · ₩004430 · 송원산업

₩10,360▲ ₩10 (0.10%)End-of-day · Oct 28, 2026 · End-of-day prices.
Trade
Alert me
SellBuy

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

₩33,253

vs the current price (₩10,360)

Enterprise value
₩863B
Equity value
₩798B
WACC
6.7%

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 221% 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 ₩10,360, the model needs an operating margin of 3.1% every year (it uses 7.1%).
  • Margins ranged from 2.1% to 13.9% over the last 5 years, so this is a cyclical business. The model uses the average; the price may be set by where the cycle is now. Try the margin fade option.
  • Today's P/E is 5.3× 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
₩16,982
+63.9%
Base
₩33,253
+221.0%
Bull
₩63,878
+516.6%

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

Start from

Preliminary results are the company's early announcement of a quarter's sales and operating profit, before the full report. Including them swaps that quarter in for the same quarter a year earlier.

Margin path

Every year uses the cycle-average margin (7.1%).

Revenue growth

  • -7.9%

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

    Default: the last 3 years' revenue growth (-7.9% a year, annual reports), fading to 3% by year 5.

  • -5.2%

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

    Default: the last 3 years' revenue growth (-7.9% a year, annual reports), fading to 3% by year 5.

  • -2.4%

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

    Default: the last 3 years' revenue growth (-7.9% a year, annual reports), fading to 3% by year 5.

  • 0.3%

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

    Default: the last 3 years' revenue growth (-7.9% 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 (-7.9% a year, annual reports), fading to 3% by year 5.

Business

  • 7.1%

    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.

  • 2.5%

    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).

  • 3.1%

    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).

  • 33.8%

    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.

  • 4.08%

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

    Default: Korea Treasury Bond 10-year yield on 2026-10-29.

  • 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 0.18, 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.

  • 5.58%

    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)
₩1.1T
Net debt (borrowings and leases − cash and deposits)
₩64B
Shares
24,000,000
Share price
₩10,360
Market cap
₩249B

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₩1T₩1.1T₩1T₩1T₩957B₩934B₩937B₩965B
Growth−22.5%3.9%−2.9%−7.9%−5.2%−2.4%0.3%3.0%
EBIT₩58B₩63B₩22B₩72B₩68B₩66B₩66B₩68B
EBIT margin5.7%5.9%2.1%7.1%7.1%7.1%7.1%7.1%
After-tax EBIT₩42B₩46B₩16B₩52B₩49B₩48B₩48B₩50B
+ Depreciation———₩25B₩24B₩23B₩23B₩24B
− Capital spending₩43B₩24B₩31B₩31B₩30B₩29B₩29B₩30B
− Working capital−₩52B₩32B₩14B−₩29B−₩18B−₩7.8B₩947M₩9.5B
Free cash flow———₩75B₩61B₩50B₩42B₩34B
Discount factor———0.9370.8780.8230.7720.723
Present value———₩70B₩54B₩41B₩32B₩25B

Terminal value ₩885B, worth ₩640B today: 74% 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 ₩34,093 a share)Now 0.30×₩10,5370.31×₩16,6990.49×₩30,4520.89×
Price / earnings (last 12 months: ₩1,945 a share)Now 5.33×₩6,0703.12×₩14,5627.49×₩20,97110.8×
P/E on run-rate earnings (preliminary Q3 2026 × 4: ₩2,170 a share)Now 4.78×₩6,7723.12×₩16,2467.49×₩23,39610.8×

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%
5.7%₩36,702₩39,185₩42,326₩46,435₩52,050
6.2%₩33,082₩34,950₩37,251₩40,161₩43,966
6.7%₩30,097₩31,528₩33,253₩35,378₩38,064
7.2%₩27,593₩28,705₩30,022₩31,609₩33,564
7.7%₩25,461₩26,336₩27,356₩28,563₩30,017

Now (TTM)

Market cap
₩249B
Enterprise value
₩275B
P/E
5.3×
P/B
0.3×
P/S
0.2×
EV/EBITDA
—
Dividend yield
2.9%

Over time (at each year end)

20252024202320222021
Price₩9,050₩11,190₩16,360₩17,200₩21,450
Market cap₩217B₩269B₩393B₩413B₩515B
P/E92.9×6.0×11.3×3.1×7.1×
P/B0.3×0.4×0.6×0.6×0.9×
P/S0.2×0.3×0.4×0.3×0.5×
EV/EBITDA—————
Dividend yield3.3%2.7%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Songwon Industrial5.3×0.3×0.2×—2.9%
LG Chem—0.5×0.3×—0.8%
Hanwha Solutions—0.6×0.4×—0.0%
Hanwha6.3×0.4×0.1×—1.4%
SKC—2.1×2.0×—0.0%
KCC0.9×0.3×0.5×8.9×0.0%
Kumho Petro Chemical5.3×0.4×0.4×—1.6%
Similar companies (median)5.3×0.4×0.4×8.9×0.4%

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

Also known as: Songwon Industrial / 송원산업 / 004430 / KRX:004430

Source: KRX statistical information