[Click eStock] "DY Auto Corporation, Defense SME for Which LIG D&A Made Its First Equity Investment"

There is an analysis that DY Auto Corporation is raising expectations for a revaluation of its corporate value, driven by two main growth engines: the expansion of its defense business and growth in eco-friendly automotive parts. In particular, growth momentum is expected to strengthen as LIG D&A's strategic equity investment and the full reflection of its defense subsidiary's results begin in earnest.

On July 23, independent research firm Value Finder stated in a report that DY Auto Corporation has secured a solid growth base encompassing both automotive parts and defense, as the performance of its defense subsidiary, DY Auto Dynamics, will now be fully reflected from this year, and the positive effects of strategic investment from LIG D&A will be added.

DY Auto Corporation's consolidated sales for the first quarter of this year reached approximately KRW 3.32 billion, a 27% increase from the same period last year. Established in 2000, DY Auto Corporation is a company specializing in precision metalworking parts for automotive powertrains and was listed on the KOSDAQ market in 2021. The company supplies key drivetrain components such as shafts, flanges, and pinions to leading global automakers including Mercedes-Benz, BMW, Audi, Porsche, Stellantis, and GM. As of the first quarter of this year, exports accounted for 88% of total sales.

Last July, the company acquired Sinsaegae Junggong, a defense precision parts manufacturer, for KRW 13 billion and changed its name to DY Auto Dynamics. DY Auto Dynamics supplies projectile fuse components for the K9 self-propelled howitzer and turbojet booster parts for guided missiles such as Cheongung-II and Hyeonung to Hanwha and LIG D&A. As the acquisition effect will be fully reflected in the annual performance for the first time this year, it is expected to contribute to improved profitability.

Collaboration with LIG D&A is also being strengthened. In May, LIG D&A made an investment of KRW 2 billion in DY Auto Corporation through a third-party allocation of new shares, and the entire amount was re-invested in a capital increase at DY Auto Dynamics. Consequently, LIG D&A has become an indirect shareholder of DY Auto Dynamics, and it is anticipated that the company will further solidify its status as a primary partner to LIG D&A, which produces systems such as Cheongung-II, Hyeonung, and Bigoong.

In the automotive sector, the company is increasing its share of eco-friendly vehicle components. DY Auto Corporation mass-produces shafts for the Mercedes-Benz EQC electric vehicle and flanges for BMW X3 and X5 eco-friendly vehicles. As a result, it is being viewed not just as a conventional internal combustion engine parts supplier but also as an eco-friendly powertrain components manufacturer.

Value Finder researcher Woo Bin Jeon commented, "DY Auto Corporation has entered a phase where the contribution to earnings from the profitable defense segment is becoming fully realized, based on its stable automotive drivetrain business." He further explained, "If collaboration with LIG D&A expands, it could become an opportunity to increase the scale of the defense business by securing not only domestic procurement volumes but also export volumes."

He added, "Currently, the value of the defense business is not fully reflected in the corporate valuation. A revaluation is needed, considering both the eco-friendly automotive parts and the defense materials, parts, and equipment businesses as dual growth engines."

In summary, DY Auto Corporation is expected to see its corporate value re-evaluated as a growth company spanning both automotive and defense sectors, based on the consolidation of its defense subsidiary's results, strategic investment from LIG D&A, and expansion in eco-friendly vehicle parts.

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