Sum-of-parts, peak-cycle-normalized · +137% margin of safety
Whole MC distribution above price — P(below) = 0%Sum-of-parts intrinsic ₩42,208/share (post 10% governance; pre ₩46,898) vs market ₩17,800. Casino cash cow ₩14,660 + Neoview auto ₩27,547. Even the Monte Carlo p5 sits at ₩30,006 — well clear of today’s price, though most of the upside is a leveraged bet on the automotive ramp.
What it sells, where it sells
Operating segments
The two businesses split on 2026-07-01: Casino is the high-margin cash cow that covers ~82% of today’s price on its own; Neoview is the larger-revenue, lower-margin growth leg where almost all the upside — and the risk — lives.
Country mix (revenue-weighted CRP input)
Blended across the two legs: casino bills US/Japan/Australia gaming OEMs; Neoview is Korea/China/Germany (Hyundai-Kia, Continental, Dalian plant). A US gaming-capex pause hits casino; a Korea/China auto or tariff shock hits Neoview — the legs do share Korea macro and KRW-FX risk.
Background — five things to know before the case
Context the share price doesn't carry on its face. Skim this once and the bull / bear bullets below stop reading as inside baseball.
- Two businesses about to become two companies. The automotive-display leg (“Neoview”) spins off via horizontal split (冸分割) effective 2026-07-01, relisting 2026-07-20, ratio 0.6463 casino / 0.3537 Neoview. A buyer today receives BOTH successor shares, so we value the sum of the parts.
- Casino is a genuine global #1. ~70-80% share of specialty gaming/slot monitors, supplying 4 of the top-5 machine makers (IGT, Aristocrat, Light & Wonder, Konami). ~80% of casino revenue is recurring 3-4yr replacement on 24/7 machines; curved-premium monitors carry 2-3× ASP.
- Cyclical scar tissue is real. FY2020-22 was loss-making (COVID casino shutdown + panel/FX/freight). 2024 earnings +400% and Q1’26 NI +83.6% are partly a snapback; FY2025 revenue grew only +2.6%. We normalize the casino margin off its 12.4% peak to ~9% in the flows.
- Pro-minority capital allocation — rare for a Korean small-cap. Growing dividend (₩100→₩350), a Dec-2025 three-year buyback-AND-cancellation program, an actual 129,418-share cancellation in March 2026, and co-CEO/founder Kim Yong-Beom buying 13,709 shares on-market. ~18% insiders, 65% float, no controlling block.
- Automotive backlog is the growth driver. ~₩500B OEM backlog (Continental from Q4’25, domestic OEM from end-2026); Seocheon + Dalian plants ramping; Neoview management targets ~₩1T revenue. Just turned profitable in 2024 — an early ramp, not a proven run-rate.
Where we diverge from the sector
Each row asks: if we'd used the sector median for this one assumption instead of our override, how much would the share price change? Negative = our override is more conservative (worth less); positive = more aggressive (worth more). Skim down the rightmost column to see which bets are doing the work.
The story & the five claims
The 10-year story this DCF is built on, plus the five anchor claims that translate the story into engine inputs.
The 10-year story
TOVIS is two businesses welded together that are about to be split apart. The first, casino monitors, is a global #1 cash cow — ~70-80% share, recurring 3-4-year replacement demand, fat curved-premium margins — but the current 12.4% margin is a cyclical and post-COVID-replacement high, so we normalize it to ~9% and let revenue ease before it stabilizes. Even on that conservative footing the casino leg is worth ~₩14,660/share, about 82% of the entire current price on its own. The second business, automotive displays (“Neoview”), just turned profitable and is converting a ~₩500B OEM backlog toward a ~₩1T revenue ambition; we model 12% growth and a margin glide to 7.5%, which is where almost all of the upside lives. Summed, the two legs are worth ~₩42,208/share against ₩17,800 today — cheap even on conservative casino assumptions, with the large upside a leveraged bet on the auto ramp executing.
Two debates worth pressure-testing
- We value the parts, not the consolidated entity. The 2026-07-01 spin-off means a single blended DCF mis-values the sum; sell-side largely still models the combined company.
- Casino margin normalized to 9%, not held at the 12.4% peak. The peak-cycle story is in the flows — year-1 reverts off the peak and revenue eases. This is the single biggest reason our number isn’t even higher.
- Neoview growth 12%, below the 17-25% consensus. An execution-haircut on the backlog and the company’s ~₩1T ambition; we are deliberately under the Street here.
- Beta from leg fundamentals, not the screen. The 0.32-0.54 regression is rejected as illiquidity-suppressed; casino 1.20 / Neoview 1.35 re-lever to ~1.74, WACC ~9% — higher (more conservative) than the screen implies.
- Consensus target ~₩27,000 (+52%) is far below this DCF. The gap is a multiple re-rating (fair ~14× EV/EBIT vs the ~4.8× P/E paid) that the market has not yet granted; the spin-off is the named catalyst.
- Neoview is 84% terminal value — the bet may not pay. Year-1 FCFF is negative (investing); the ₩457B leg rests on reaching ~₩874B revenue at 7.5% by year 10. If the backlog slips or tariffs bite, the MC p5 (~₩16k allocated) shows the leg roughly at its allocated price.
- Deeper casino downcycle than the 9% normalization. If a replacement-cycle rollover takes the casino margin toward 7% (it was loss-making 2020-22), the casino leg drops proportionally — it is ~half the SOTP.
- Persistent KOSDAQ / Korea discount. The market may keep price below intrinsic indefinitely even with the buyback; consensus only sees +52%, not +137%. The spin-off is the catalyst that has to fire.
- FX / translation. ~66% of revenue is non-Korea; KRW strength or hedging slippage can swing margins more than the operating debate captures.
- Spin-off allocation risk. If the split documents hand cash/debt/backlog to minorities unfavorably, the 10% governance haircut is too light — the lever to watch on the 2026-07-20 relisting.
Risks to thesis (tail, not bear case)
84% of the auto leg’s value is terminal. Lumpy OEM timing or 2026 US auto-tariff drag and the backlog doesn’t convert — most of the +137% evaporates toward the ~+18% casino-plus-book floor.
Gaming capex is cyclical (casinos shut in COVID → Tovis losses). A replacement-cycle rollover past the 9% normalization compresses ~half the SOTP.
Price can sit below intrinsic for years regardless of the buyback. Consensus only sees +52%; the multiple re-rating needs the spin-off catalyst to fire.
~66% of revenue is non-Korea. KRW strength or hedge slippage can move blended margin more than the modeled operating call.
An unfavorable cash/debt/backlog split to minorities at the 2026-07-20 relisting would make the 10% governance haircut too light. Watchable, not yet a base case.
The combined MC sums two near-independent leg distributions, which narrows the relative band. A shared Korea/KRW shock would widen it — read p5 as optimistic on co-movement.
10-year forecast
Combined revenue ₩694B → ₩1.16T over 10y (casino normalized + Neoview ramp); blended operating margin ~7.7% → ~7.9%. Casino starts at a normalized 9% (reverting off the 12.4% peak); Neoview glides 6.5% → 7.5%.
Monte Carlo distribution
Even at the 5th-percentile outcome (₩30,006/sh), intrinsic exceeds today’s ₩17,800 by 69% — across 1,000 draws not one lands below the market. The combined band sums two near-independent legs, so read it as optimistic on how correlated a Korea-wide shock would be.
Mean ₩42275.94 ± ₩7607.54/sh, 1000 iterations (0 failed). P(intrinsic < market ₩17800.00) = 0.0%.
Cost of capital build
| Risk-free rate | 3.00% |
| Mature-market ERP | 4.23% |
| Levered β | 1.74 |
| Weighted CRP | 0.50% |
| Cost of equity | 11.22% |
| Pre-tax cost of debt (synth Aaa/AAA) | 5.50% |
| D / V | ~31% |
| WACC | 9.08% |
Full year-by-year DCF
| Year | Revenue | Op mgn | EBIT | EBIT(1−t) | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | ₩694.01B | 7.67% | ₩53.22B | ₩44.12B | ₩22.17B | ₩21.95B | ₩20.23B |
| 2 | ₩737.04B | 7.72% | ₩56.86B | ₩47.14B | ₩25.31B | ₩21.83B | ₩18.54B |
| 3 | ₩786.04B | 7.78% | ₩61.12B | ₩50.67B | ₩28.82B | ₩21.85B | ₩17.09B |
| 4 | ₩843.48B | 7.85% | ₩66.24B | ₩54.74B | ₩33.79B | ₩20.95B | ₩15.13B |
| 5 | ₩910.06B | 7.95% | ₩72.31B | ₩59.61B | ₩39.17B | ₩20.44B | ₩13.63B |
| 6 | ₩974.86B | 7.92% | ₩77.17B | ₩62.94B | ₩34.10B | ₩28.84B | ₩17.52B |
| 7 | ₩1.04T | 7.89% | ₩81.70B | ₩65.93B | ₩31.67B | ₩34.26B | ₩19.13B |
| 8 | ₩1.09T | 7.88% | ₩85.71B | ₩68.40B | ₩27.77B | ₩40.63B | ₩20.93B |
| 9 | ₩1.13T | 7.87% | ₩89.00B | ₩70.22B | ₩22.54B | ₩47.68B | ₩22.75B |
| 10 | ₩1.16T | 7.87% | ₩91.41B | ₩71.30B | ₩16.22B | ₩55.08B | ₩24.46B |
Methodology & flags
Damodaran FCFF DCF, 10y explicit + perpetuity, in KRW. Risk-free
3.00% (local-currency government bond). Synthetic credit Aaa/AAA.
CRP 0.50% from revenue-weighted country mix × Damodaran 2026 CRPs.
Terminal ROIC faded to 13.00%; 10% governance haircut applied
post-DCF. Monte Carlo: 1000 iterations. Engine v1.0.0 · result:
/Users/valentin/Documents/notes_jiliac_labs/Finance/Damodaran/valuations/tovis/output/2026-06-01-result.json
- R&D cap: OFF · Lease cap: OFF · Failure: OFF · ESO: OFF
- Governance haircut: 10% applied post-DCF (₩46897.60 > ₩42207.84)
- Sensitivity tornado: not run