Ask Warren

Derkwoo Electronics

263600 · KOSDAQ · ₩263600 · 덕우전자

₩3,925▲ ₩30 (0.77%)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

With these assumptions the model gives no positive value.

Enterprise value
−₩33B
Equity value
−₩61B
WACC
5.8%

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 gives no positive value at these assumptions. What we can see:

  • To match today's price of ₩3,925, the model needs an operating margin of 5.2% every year (it uses 1.4%).
  • Margins ranged from −6.0% to 9.1% 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.
  • 87% 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.
  • In the projection, spending on equipment, software and working capital takes most or all of the after-tax operating profit, so free cash flow is thin. Companies that invest heavily often look like this until spending slows.
  • Today's P/E is 2.5× against a typical 16.2× 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
—
Base
—
Bull
₩1,448
−63.1%

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 (1.4%).

Revenue growth

  • -5.4%

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

    Default: the last 3 years' revenue growth (-5.4% a year, annual reports), fading to 3% by year 5.

  • -3.3%

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

    Default: the last 3 years' revenue growth (-5.4% a year, annual reports), fading to 3% by year 5.

  • -1.2%

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

    Default: the last 3 years' revenue growth (-5.4% a year, annual reports), fading to 3% by year 5.

  • 0.9%

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

    Default: the last 3 years' revenue growth (-5.4% 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 (-5.4% a year, annual reports), fading to 3% by year 5.

Business

  • 1.4%

    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.

  • 12.3%

    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).

  • 15.4%

    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).

  • 13.5%

    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.

  • 0.61

    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 0.42, 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)
₩199B
Net debt (borrowings and leases − cash and deposits)
₩57B
+ Stakes and investments
₩31B
Associates, long-term financial assets and deposits (book value)
− Minority interests
₩3.2B
Shares
15,930,310
Share price
₩3,925
Market cap
₩63B

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₩165B₩161B₩177B₩188B₩182B₩180B₩181B₩187B
Growth−21.0%−2.5%9.9%−5.4%−3.3%−1.2%0.9%3.0%
EBIT−₩9.9B−₩992M₩1.6B₩2.6B₩2.5B₩2.5B₩2.5B₩2.6B
EBIT margin−6.0%−0.6%0.9%1.4%1.4%1.4%1.4%1.4%
After-tax EBIT−₩7.2B−₩719M₩1.1B₩1.9B₩1.8B₩1.8B₩1.8B₩1.9B
+ Depreciation———₩23B₩22B₩22B₩22B₩23B
− Capital spending₩33B₩14B₩31B₩29B₩28B₩28B₩28B₩29B
− Working capital−₩5.3B−₩753M₩49B−₩1.5B−₩838M−₩295M₩218M₩735M
Free cash flow———−₩2.5B−₩3B−₩3.5B−₩4B−₩4.6B
Discount factor———0.9450.8930.8430.7970.753
Present value———−₩2.3B−₩2.6B−₩2.9B−₩3.2B−₩3.5B

Terminal value −₩24B, worth −₩18B today: 55% 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 ₩7,585 a share)Now 0.52×₩4,8540.64×₩7,8091.03×₩11,3481.50×
Price / earnings (last 12 months: ₩1,579 a share)Now 2.49×₩3,7652.38×₩25,55216.2×₩48,65730.8×

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%
4.8%—————
5.3%—————
5.8%—————
6.3%—————
6.8%—————

Now (TTM)

Market cap
₩63B
Enterprise value
₩119B
P/E
2.5×
P/B
0.5×
P/S
0.3×
EV/EBITDA
—
Dividend yield
0.0%

Over time (at each year end)

20252024202320222021
Price₩4,780₩4,735₩9,300₩6,850₩9,370
Market cap₩76B₩75B₩148B₩109B₩149B
P/E11.0×——8.2×35.3×
P/B0.7×0.7×1.5×1.0×1.5×
P/S0.4×0.5×0.9×0.5×0.8×
EV/EBITDA—————
Dividend yield0.0%————

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Derkwoo Electronics2.5×0.5×0.3×—0.0%
Samsung Electro-Mechanics89.0×8.8×7.2×—0.2%
Doosan36.8×5.2×0.7×—0.4%
Hanwha Systems67.9×2.7×2.9×—0.8%
LG Innotek13.4×1.4×0.4×—0.5%
Isupetasys32.5×7.6×5.0×—0.0%
Daeduck Electronics41.5×6.5×4.7×—0.4%
Similar companies (median)39.2×5.8×3.8×—0.4%

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

Also known as: Derkwoo Electronics / 덕우전자 / 263600 / KRX:263600

Source: KRX statistical information