Ask Warren

Chokwang Leather

004700 · KOSPI · ₩004700 · 조광피혁

₩65,000▲ ₩300 (0.46%)End-of-day · Oct 27, 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

₩15,750

vs the current price (₩65,000)

Enterprise value
₩57B
Equity value
₩105B
WACC
7.4%

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 76% 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 ₩65,000, the model needs an operating margin of 40.1% every year (it uses 6.9%).
  • Margins ranged from 0.4% to 10.5% 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.
  • 62% 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 44.5× against a typical 40.5× 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
₩11,887
−81.7%
Base
₩15,750
−75.8%
Bull
₩22,727
−65.0%

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 (6.9%).

Revenue growth

  • -7.1%

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

    Default: the last 3 years' revenue growth (-7.1% a year, annual reports), fading to 3% by year 5.

  • -4.6%

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

    Default: the last 3 years' revenue growth (-7.1% a year, annual reports), fading to 3% by year 5.

  • -2%

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

    Default: the last 3 years' revenue growth (-7.1% a year, annual reports), fading to 3% by year 5.

  • 0.5%

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

    Default: the last 3 years' revenue growth (-7.1% 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 (-7.1% a year, annual reports), fading to 3% by year 5.

Business

  • 6.9%

    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.

  • 1.5%

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

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

  • 3.2%

    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).

  • 36.8%

    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.

  • 4.11%

    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 0.14, 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)
₩88B
Net debt (borrowings and leases − cash and deposits)
−₩48B
Shares
6,649,138
Share price
₩65,000
Market cap
₩432B

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₩127B₩90B₩98B₩82B₩78B₩76B₩77B₩79B
Growth3.7%−28.7%8.5%−7.1%−4.6%−2.0%0.5%3.0%
EBIT₩6.3B₩7.2B₩8.8B₩5.6B₩5.4B₩5.3B₩5.3B₩5.5B
EBIT margin5.0%8.0%9.0%6.9%6.9%6.9%6.9%6.9%
After-tax EBIT₩4.6B₩5.2B₩6.4B₩4.1B₩3.9B₩3.8B₩3.8B₩4B
+ Depreciation₩1.7B₩1.4B₩1.4B₩1.2B₩1.2B₩1.1B₩1.2B₩1.2B
− Capital spending₩4.8B₩5B₩315M₩2.6B₩2.5B₩2.4B₩2.5B₩2.5B
− Working capital₩1.4B−₩26B₩1.4B−₩2.3B−₩1.4B−₩573M₩140M₩847M
Free cash flow₩94M₩28B₩6.1B₩5B₩4B₩3.1B₩2.4B₩1.8B
Discount factor———0.9310.8670.8070.7510.700
Present value———₩4.6B₩3.4B₩2.5B₩1.8B₩1.2B

Terminal value ₩61B, worth ₩43B today: 76% 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 ₩92,063 a share)Now 0.71×₩64,0460.70×₩72,1940.78×₩83,6250.91×
Price / earnings (last 12 months: ₩1,460 a share)Now 44.5×₩45,25431.0×₩59,11640.5×₩86,54759.3×

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%
6.4%₩16,637₩17,089₩17,639₩18,326₩19,210
6.9%₩15,842₩16,187₩16,598₩17,099₩17,725
7.4%₩15,172₩15,438₩15,750₩16,123₩16,577
7.9%₩14,599₩14,806₩15,046₩15,327₩15,663
8.4%₩14,104₩14,266₩14,452₩14,666₩14,918

Now (TTM)

Market cap
₩432B
Enterprise value
₩384B
P/E
44.5×
P/B
0.7×
P/S
4.9×
EV/EBITDA
59.3×
Dividend yield
0.0%

Over time (at each year end)

20252024202320222021
Price₩65,500₩54,600₩49,850₩49,200₩54,600
Market cap₩436B₩363B₩331B₩327B₩363B
P/E37.7×28.8×36.6×54.0×32.4×
P/B0.8×0.7×0.8×0.9×1.0×
P/S4.4×4.0×2.6×2.7×3.5×
EV/EBITDA37.9×35.5×39.4×114.1×27.9×
Dividend yield0.0%————

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Chokwang Leather44.5×0.7×4.9×59.3×0.0%
F&F4.5×1.1×1.2×—4.4%
LF5.6×0.4×0.3×4.6×3.2%
Handsome6.9×0.3×0.3×—0.0%
Hansae9.4×0.4×0.2×—0.0%
JS4.0×0.6×0.2×—5.3%
Ilshin Spinning5.1×0.3×0.4×—3.8%
Similar companies (median)5.4×0.4×0.3×4.6×3.5%

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

Also known as: Chokwang Leather / 조광피혁 / 004700 / KRX:004700

Source: KRX statistical information