[Click eStock] "Gaon Jeonseon, Supply Shortage Even at 100% Factory Operation... Including Copper Price Increase Effect"

[Asia Economy Reporter Hyungsoo Park] ResearchAlum forecasted on the 1st that Gaon Cable's performance will improve as the cable industry is booming and price increases are added. The appropriate stock price was suggested to be 52,000 KRW.

Researcher Doyoon Kim of ResearchAlum explained, "The average price per ton of copper, a major raw material, rose by 30.1% from 7.55 million KRW last year to 9.82 million KRW in the first quarter of this year," adding, "The average selling price of Gaon Cable's domestic cable products also increased by 26.4%."

He emphasized, "Generally, cable companies link their selling prices in supply contracts to raw material market prices, so the rise in copper prices leads to improved performance for Gaon Cable." Furthermore, he said, "The LME copper price rose from $8,850 per ton on March 31 to $10,032 on the 27th," and added, "We expect strong performance in the second quarter due to the effect of price increases."

Researcher Kim also introduced, "Gaon Cable was the first in Korea to develop industrial Ethernet cables together with LS Cable," and explained, "Ethernet is a local area network that allows devices connected to the network to send and receive data."

He continued, "Industrial Ethernet cables must be usable under high temperature and humidity conditions," adding, "They require higher flexibility compared to general cables." He also emphasized, "These products are mainly used in equipment necessary for building automated lines such as conveyor robots," and "Currently, they are supplied to domestic factory automation equipment companies."

Researcher Kim analyzed, "The factory operation rate of the telecommunications division in the first quarter was 100%," and explained, "With the expansion of 5G coverage, demand for communication cables such as optical cables and LAN cables has increased, leading to the establishment of a 100% subsidiary, Easy Cable, in March last year to expand production facilities."

He added, "Although a new corporation was established due to the limitations of additional production using existing outsourced manufacturers, further production facilities are still needed," and noted, "In the first quarter performance, the telecommunications division's operating profit accounted for 42%."