Ask Warren

Shin Hwa Contech

187270 · KOSDAQ · ₩187270 · 신화콘텍

₩2,695▲ ₩25 (0.94%)End-of-day · Oct 30, 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

₩5,832

vs the current price (₩2,695)

Enterprise value
₩52B
Equity value
₩59B
WACC
7.3%

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 116% 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 ₩2,695, the model needs an operating margin of 4.7% every year (it uses 8.2%).
  • Margins ranged from 5.4% to 13.4% 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.
  • 37% 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 9.3× against a typical 9.1× 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
₩3,364
+24.8%
Base
₩5,832
+116.4%
Bull
₩10,252
+280.4%

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 (8.2%).

Revenue growth

  • 5.9%

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

    Default: the last 3 years' revenue growth (5.9% 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 (5.9% a year, annual reports), fading to 3% by year 5.

  • 4.5%

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

    Default: the last 3 years' revenue growth (5.9% a year, annual reports), fading to 3% by year 5.

  • 3.7%

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

    Default: the last 3 years' revenue growth (5.9% 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 (5.9% a year, annual reports), fading to 3% by year 5.

Business

  • 8.2%

    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.

  • 5.8%

    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).

  • 7.2%

    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).

  • 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.

  • 4.01%

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

    Default: Korea Treasury Bond 10-year yield on 2026-10-30.

  • 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 0.24, 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.

  • 5.51%

    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)
₩58B
Net debt (borrowings and leases − cash and deposits)
−₩7B
Shares
10,143,845
Share price
₩2,695
Market cap
₩27B

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₩52B₩52B₩53B₩61B₩65B₩68B₩70B₩72B
Growth15.6%0.0%2.8%5.9%5.2%4.5%3.7%3.0%
EBIT₩4.9B₩7B₩4.8B₩5B₩5.3B₩5.5B₩5.7B₩5.9B
EBIT margin9.5%13.4%9.0%8.2%8.2%8.2%8.2%8.2%
After-tax EBIT₩3.6B₩5B₩3.5B₩3.7B₩3.8B₩4B₩4.2B₩4.3B
+ Depreciation———₩3.6B₩3.7B₩3.9B₩4.1B₩4.2B
− Capital spending₩2.8B₩6.4B₩2.1B₩4.4B₩4.7B₩4.9B₩5B₩5.2B
− Working capital−₩5.2B−₩3.2B−₩7.7B₩1.4B₩1.3B₩1.2B₩1,000M₩841M
Free cash flow———₩1.4B₩1.7B₩1.9B₩2.2B₩2.4B
Discount factor———0.9320.8680.8090.7540.703
Present value———₩1.3B₩1.4B₩1.5B₩1.6B₩1.7B

Terminal value ₩63B, worth ₩44B today: 85% 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 ₩7,149 a share)Now 0.38×₩3,2270.45×₩5,1980.73×₩7,0310.98×
Price / earnings (last 12 months: ₩291 a share)Now 9.27×₩1,6065.53×₩2,6549.13×₩4,66416.0×
P/E on run-rate earnings (Q2 2026 × 4: ₩275 a share)Now 9.79×₩1,5225.53×₩2,5149.13×₩4,41916.0×

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%
6.3%₩6,419₩6,739₩7,132₩7,624₩8,263
6.8%₩5,876₩6,121₩6,414₩6,773₩7,223
7.3%₩5,421₩5,610₩5,832₩6,099₩6,425
7.8%₩5,034₩5,181₩5,352₩5,553₩5,794
8.3%₩4,700₩4,816₩4,948₩5,102₩5,283

Now (TTM)

Market cap
₩27B
Enterprise value
₩20B
P/E
9.3×
P/B
0.4×
P/S
0.5×
EV/EBITDA
—
Dividend yield
0.0%

Over time (at each year end)

20252024202320222021
Price₩3,170₩2,965₩4,615₩4,140₩4,700
Market cap₩32B₩30B₩47B₩42B₩48B
P/E10.4×4.0×11.8×9.0×13.4×
P/B0.5×0.4×0.8×0.7×0.9×
P/S0.6×0.6×0.9×0.9×1.1×
EV/EBITDA—————
Dividend yield0.0%0.0%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Shin Hwa Contech9.3×0.4×0.5×—0.0%
LS Electric57.7×10.5×3.9×35.7×0.0%
Hyosung Heavy Industries28.8×6.5×2.6×—0.4%
HD Hyundai Electric18.0×6.8×3.5×—0.0%
Gaon Cable105.6×12.8×2.3×55.0×0.0%
Sanil Electric24.9×6.8×7.6×—0.9%
Taihan Cable & Solution—2.1×0.9×—0.0%
Similar companies (median)28.8×6.8×3.1×45.4×0.0%

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

Also known as: Shin Hwa Contech / 신화콘텍 / 187270 / KRX:187270

Source: KRX statistical information