Korea’s water purifier maker and distributer Coway is likely to post satisfactory first-quarter earnings but its major stakeholder’s exit move will be a burden on its stock price, an analyst said Thursday.

Local private equity MBK Partners, which owns 30.9 percent stake in Coway, put the company up for sale in August last year and selected Goldman Sachs to broker the deal.


CJ Group in December last year did not submit a final offer for MBK’s Coway stake after taking part in preliminary bidding in October.

“Private equity funds like MBK Partners have a clear purpose of increasing companies’ profitability. Coway’s operating profit margin went up from 16 percent in 2013 to 20 percent last year,” said Kang Jae-sung, an analyst at Hyundai Securities.

“If Coway is sold to a manufacturing company, this profitability will not continue because the buyer is likely to focus on a long-term goal. This concern will weigh on Coway’s shares until the sales issue is cleared,” he said.

Despite the uncertainty on the sales issue, Kang recommended “buy” on Coway shares on positive first-quarter earnings outlook. Coway’s sales and operating profit are expected to increase 10.4 percent and 17.8 percent to post 605 billion won ($522.9 million) and 118.2 billion won, respectively, in the first quarter from a year earlier, he said.

He attributed the sales growth outlook to a rise in water and air purifier sales in the local market and an improved sales in overseas markets including Malaysia and the U.S.

Coway’s market cap stood at 7.24 trillion won as of Thursday.

By Kim Yoon-mi (yoonmi@heraldcorp.com)