Daejoo Inc. (KOSDAQ:003310) is a South Korean company that makes mixed feed products. Recently, its stock has attracted attention by rising 51% over the last three months. This strong performance raises questions about the company’s financial health and whether it justifies this increase.
Daejoo’s good market performance seems to reflect its solid financial foundation. One important measure is its Return on Equity (ROE), which shows how well a company makes profit from shareholder investments.
For the twelve months ending December 2024, Daejoo reported an ROE of 10.0%. This means that for every ₩1 of shareholder equity, the company generated ₩0.10 in profit. While this return is moderate, Daejoo also focuses on reinvesting its earnings.
The company has a low three-year median dividend payout ratio of 22%, which means it keeps 78% of its profits for growth. Daejoo has a record of increasing its earnings and consistently paying dividends for six years, showing its commitment to long-term growth.
Daejoo’s recent financial statements show steady revenue, reaching ₩106.04 billion in fiscal year 2024, a slight rise from the previous year.
However, net income dropped to ₩8.32 billion in FY 2024, following a large increase in FY 202324. Despite this drop in net income, measures like the operating margin improved, rising to 9.45% in FY 2024 from 7.29% in FY 20232.
Market indicators also show Daejoo in a positive light. The stock has performed better than the FTSE Developed Asia Pacific Index over the last three, six, and twelve months. Its share price is above its 50-day and 200-day moving averages, indicating a strong upward trend.
Valuation metrics, like a Price-to-Book ratio near 1, a Price-to-Free Cash Flow ratio under 10, and a low PE ratio around 7.23, suggest the stock may still hold value despite its recent rise.
In conclusion, Daejoo Inc.’s stock price increase of 51% over the last quarter appears to be closely linked to its solid financial management. The company generates good returns on equity while keeping a large part of its earnings for reinvestment, which supports its focus on sustainable growth.
Though recent net profit figures need attention, the overall financial health, favorable market trends, and reasonable valuations suggest that the stock increase has a solid foundation.