[Click eStock] "Dongwon Fisheries Secures Growth Drivers with New Trawler and Vertical Integration... Company Value Set for Revaluation"

An analysis has suggested that Dongwon Fisheries is set to establish a foundation for mid- to long-term performance growth through the deployment of a new large-scale trawler and the expansion of its seafood value chain. Efforts to strengthen shareholder returns—such as stock purchases by the largest shareholder and management, and the consideration of increased dividends—were also cited as factors for a potential revaluation of the company’s value.

On June 30, independent research firm ValueFinder forecast that Dongwon Fisheries is expected to increase its catch volume with the new trawler “DW NOVA,” scheduled to be deployed in October. The company is also anticipated to achieve improved results through a vertical integration strategy via the acquisition of a cold chain logistics company.

Dongwon Fisheries, established in 1970 and listed on the KOSPI in 1996, is a company specializing in deep-sea fishing. The company currently owns three trawlers operating in New Zealand waters and 14 tuna longliners active in the Pacific and Indian Ocean fishing grounds.

As of the first quarter of this year, the company’s revenue composition consists of 56.0% from fisheries, 35.4% from seafood distribution, and 8.6% from grain manufacturing. Dongwon Fisheries has maintained a stable catch quota through a partnership of approximately 40 years with Sanford Limited, New Zealand’s largest seafood company. This is regarded as a competitive advantage that is difficult for new entrants to secure in a short period of time.

In addition, as most of its revenue is generated in US dollars, the company is expected to benefit from a favorable business environment when the KRW-USD exchange rate rises.

Dongwon Fisheries has secured the new trawler DW NOVA, which has a gross tonnage of 2,342 GT. The vessel is set to depart from Busan in July and enter full operation in New Zealand waters starting in October.

DW NOVA is approximately three times larger than the company’s existing trawlers, and it is notable that it will utilize the company’s current catch quotas without requiring additional quotas. As a result, the increase in catch volume is expected to be quickly reflected in the company’s results without any further restrictions.

Particularly, as deep-sea fishing is a business with a high proportion of fixed costs, the company also expects to benefit from an operating leverage effect following the deployment of the new vessel and subsequent increase in production volume.

Dongwon Fisheries is also pursuing vertical integration to enhance its business structure. The company is considering acquiring a cold chain logistics company, aiming to internalize the entire seafood value chain—from fishing to logistics, processing, storage, and distribution.

ValueFinder projected that internalizing external costs incurred in logistics and distribution, and potentially expanding to B2C distribution channels in the future, would further improve profitability.

Efforts to strengthen shareholder returns were also evaluated as positive. Vice Chairman Wang Ki-cheol, the largest shareholder, announced plans to purchase company shares worth approximately 160 million won, while the CEO plans to purchase shares worth approximately 270 million won on the market between July 23 and August 21. The planned acquisition price is 5,740 won per share.

The direct financial commitment by management to increase their stake is interpreted as a reflection of the view that the current share price is undervalued relative to the company’s intrinsic value. The company also plans to actively consider a more aggressive dividend policy starting next year, when performance improvement is expected to accelerate.

Lee Chungheon, a researcher at ValueFinder, stated, “Because the new trawler DW NOVA will utilize existing quotas, the increase in catch volume can be quickly reflected in the company’s performance. Given the high proportion of fixed costs in deep-sea fishing, operating leverage effects are also anticipated.”

He added, “If vertical integration is completed through the acquisition of a cold chain logistics company, two opportunities for profitability improvement—internalization of external margins and expansion into B2C channels—will open simultaneously. With three growth drivers—expanded production capacity, value chain internalization, and strengthened shareholder returns—progressing at once, it is worth paying attention to the company’s future performance improvement trend.”

This content was produced with the assistance of AI translation services.