[Click eStock] BH, Q4 Record Sales Expected... "Stock Undervalued"

Hana Financial Investment Report
"High Possibility of Additional Supply to North American Clients"

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 32,000 KRW for BH on the 3rd, expecting the company to achieve its best performance in the fourth quarter.

In the third quarter, BH's sales amounted to 236.1 billion KRW, down 11% compared to the same period last year. Operating profit was 30.3 billion KRW, a 25% decrease from a year earlier. This decline is estimated to be due to delayed new model launches by its largest North American client, resulting in lower-than-expected sales. Additionally, the expansion of mid-to-low priced product volumes for domestic clients with relatively lower profitability led to operating profit margins falling short of estimates.

Researcher Rokho Kim of Hana Financial Investment stated, "Like most companies serving North American clients, the third-quarter performance was weaker than usual," adding, "However, both sales and operating profit are expected to reach record highs in the fourth quarter."

For the fourth quarter, sales and operating profit are estimated at 307.8 billion KRW and 41.5 billion KRW, respectively, representing increases of 80% and 250% compared to the same period last year. While the new model effect is concentrated in the fourth quarter, unlike previous years, this quarter also marks the full-scale supply of the higher-priced Mini and Pro Max models for BH.

Researcher Kim explained, "Sales will exceed 300 billion KRW for the first time in a quarter," and added, "All component suppliers, including BH, are unable to meet all demand in the fourth quarter due to production limits, so this effect is expected to continue into the first quarter of next year."

Furthermore, Kim Rokho noted, "Sales have been favorable following the new model launch by the North American client, and there remains potential for additional supply volumes, but the stock price does not reflect this at all," concluding, "Considering the benefits related to 5G and the expanding contribution of FPCB performance for mid-to-long-term automotive batteries, both current performance and future prospects are positive."