Ask Warren

Hwaseung R&A

378850 · KOSPI · ₩378850 · 화승알앤에이

₩2,650▼ ₩10 (0.38%)End-of-day · Oct 29, 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

₩26,258

vs the current price (₩2,650)

Enterprise value
₩640B
Equity value
₩499B
WACC
4.9%

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 891% 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 ₩2,650, the model needs an operating margin of 1.5% every year (it uses 3.8%).
  • Or revenue growth −29.5 points a year higher than assumed in each of the 5 years.
  • 31% 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 1.4× against a typical 3.4× 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
₩1,615
−39.1%
Base
₩26,258
+890.9%
Bull
₩86,683
+3,171.0%

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 (3.8%).

Revenue growth

  • 2.8%

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

    Default: the last 3 years' revenue growth (2.8% a year, annual reports), fading to 3% by year 5.

  • 2.8%

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

    Default: the last 3 years' revenue growth (2.8% a year, annual reports), fading to 3% by year 5.

  • 2.9%

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

    Default: the last 3 years' revenue growth (2.8% a year, annual reports), fading to 3% by year 5.

  • 2.9%

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

    Default: the last 3 years' revenue growth (2.8% 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 (2.8% a year, annual reports), fading to 3% by year 5.

Business

  • 3.8%

    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.

  • 2.6%

    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).

  • 2.4%

    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).

  • 9.2%

    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 0.36, 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)
₩746B
Net debt (borrowings and leases − cash and deposits)
₩141B
Shares
18,993,623
Share price
₩2,650
Market cap
₩50B

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₩681B₩707B₩715B₩766B₩788B₩811B₩834B₩859B
Growth3.5%3.9%1.1%2.8%2.8%2.9%2.9%3.0%
EBIT₩32B₩31B₩27B₩29B₩30B₩31B₩32B₩33B
EBIT margin4.7%4.4%3.8%3.8%3.8%3.8%3.8%3.8%
After-tax EBIT₩23B₩23B₩20B₩21B₩22B₩22B₩23B₩24B
+ Depreciation₩18B₩18B₩17B₩20B₩20B₩21B₩22B₩22B
− Capital spending₩13B₩20B₩19B₩18B₩19B₩19B₩20B₩21B
− Working capital−₩11B₩43B−₩5.3B₩1.9B₩2B₩2.1B₩2.2B₩2.3B
Free cash flow₩39B−₩22B₩24B₩21B₩21B₩22B₩22B₩23B
Discount factor———0.9530.9080.8660.8250.786
Present value———₩20B₩19B₩19B₩19B₩18B

Terminal value ₩693B, worth ₩545B 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 ₩9,717 a share)Now 0.27×₩3,6050.37×₩6,3550.65×₩13,6201.40×
Price / earnings (last 12 months: ₩1,852 a share)Now 1.43×₩2,9441.59×₩6,2883.40×₩18,4649.97×
P/E on run-rate earnings (Q2 2026 × 4: ₩1,733 a share)Now 1.53×₩2,7551.59×₩5,8833.40×₩17,2769.97×

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%
3.9%₩28,702₩34,571₩43,485₩58,660₩90,284
4.4%₩23,469₩27,461₩33,095₩41,652₩56,217
4.9%₩19,570₩22,427₩26,258₩31,663₩39,874
5.4%₩16,551₩18,676₩21,417₩25,090₩30,275
5.9%₩14,144₩15,771₩17,808₩20,436₩23,958

Now (TTM)

Market cap
₩50B
Enterprise value
₩190B
P/E
1.4×
P/B
0.3×
P/S
0.1×
EV/EBITDA
3.7×
Dividend yield
2.8%

Over time (at each year end)

20252024202320222021
Price₩3,270₩3,000₩4,145₩3,595₩5,140
Market cap₩62B₩57B₩79B₩68B₩98B
P/E3.4×1.8×3.3×5.4×17.1×
P/B0.4×0.4×0.7×0.7×1.6×
P/S0.1×0.1×0.1×0.1×0.2×
EV/EBITDA4.3×4.3×4.3×6.9×34.9×
Dividend yield2.3%2.5%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Hwaseung R&A1.4×0.3×0.1×3.7×2.8%
Hyundai Mobis8.7×0.6×0.5×—1.8%
SL6.0×0.9×0.4×3.7×0.0%
HL Mando10.7×0.6×0.2×—1.9%
Samhyun—12.1×17.1×—0.0%
Hyundai WIA19.4×0.4×0.2×—2.4%
SNT Dynamics13.0×0.7×0.8×—7.0%
Similar companies (median)10.7×0.7×0.5×3.7×1.9%

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

Also known as: Hwaseung R&A / 화승알앤에이 / 378850 / KRX:378850

Source: KRX statistical information