1. Q1 2025 Earnings: A Crossroads of Growth and Declining Profitability

Dongwon Metal’s Q1 2025 revenue reached 168 billion won, a 2.6% increase year-over-year. Growth was driven by stable orders from major clients and increased overseas sales. However, operating profit fell by 14.9% year-over-year to 13 billion won, and net income also decreased by 30.1% to 5.4 billion won. Increased selling, general, and administrative expenses, as well as higher financial and corporate tax expenses, are identified as the main causes of the decline in profitability.

2. Fundamental Analysis: Coexistence of Risk Factors and Growth Potential

Dongwon Metal’s financial position saw slight decreases in assets, liabilities, and equity. While the debt-to-equity ratio improved slightly from the end of the previous year to 147.31%, it remains high. ROE significantly decreased to 0.84%, and the inventory turnover ratio also plummeted, necessitating a review of inventory management efficiency. The low R&D investment ratio (0.84%) also suggests the need for increased investment to secure long-term competitiveness. However, the expansion of the US subsidiary’s plant is expected to contribute positively to future growth momentum.

3. Market Conditions and Outlook: Challenges and Opportunities

Macroeconomic uncertainties such as the global economic slowdown, persistent high interest rates, and increased exchange rate volatility are expected to put pressure on Dongwon Metal. However, the accelerating transition to eco-friendly vehicles presents new business opportunities. Dongwon Metal needs to proactively respond to these changes through adjustments to its business portfolio and the development of new technologies.

4. Investor Action Plan: A Long-Term Investment Strategy

In the short term, investor sentiment may be dampened by declining profitability and the burden of high debt-to-equity ratio. However, from a long-term perspective, considering Dongwon Metal’s future growth potential, the current difficulties can be seen as temporary. Investors should closely monitor the implementation results of Dongwon Metal’s strategies for improving profitability, strengthening financial structure, and fostering future growth engines, and make investment decisions accordingly.