Dongwon Fisheries set to deploy new trawler DW NOVA, analysts see earnings upside

Dongwon Fisheries is expected to enter a medium- to long-term growth phase, backed by the October deployment of a new large trawler, DW NOVA, and a vertical integration strategy anchored by the acquisition of a cold-chain logistics company, according to an analyst report.

"Because the new trawler DW NOVA will operate within existing quotas, the increase in catch volume can be reflected in earnings immediately," Lee Chung-heon, a researcher at ValueFinder, said in a report released Tuesday. "Given the fixed-cost nature of deep-sea fishing operations, an operating leverage effect is also expected."

Founded in 1970, Dongwon Fisheries is a deep-sea fishing specialist that operates three trawlers in New Zealand waters and 14 tuna longliners in the Pacific and Indian oceans. As of the first quarter of this year, fishing accounted for 56.0 percent of sales, seafood retail for 35.4 percent, and grain processing for 8.6 percent.

The company plans to sail DW NOVA from Busan in July and deploy it in New Zealand waters starting in October. The vessel is roughly three times the size of its existing trawlers and can boost productivity using current quotas without securing additional fishing rights — a key advantage. The expanded catch volume and resulting sales growth are expected to show up quickly in the company's financials.

The acquisition of a cold-chain logistics company and a strengthened shareholder return policy were also cited as factors that could enhance corporate value. Through the acquisition, Dongwon Fisheries plans to bring the entire seafood value chain in-house, from fishing and logistics to processing, storage and retail.

"If vertical integration is completed through the cold-chain acquisition, two paths to improved profitability open up simultaneously — internalizing external margins and expanding business-to-consumer channels," Lee said. "With three momentum drivers — expanded production capacity, value chain internalization and stronger shareholder returns — all moving forward at the same time, it is worth watching whether earnings improvement materializes."

Dongwon Fisheries has disclosed that its largest shareholder, Vice Chairman Wang Ki-chul, and its chief executive plan to buy back company shares on the open market at 5,740 won per share between July 23 and Aug. 21 — Wang for about 160 million won ($104,000) and the chief executive for about 270 million won.

As of 10:18 a.m. Tuesday, Dongwon Fisheries shares were trading at 5,620 won, down 0.35 percent from the previous session.