[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities maintained a 'Buy' rating on Estech on the 3rd, citing a historically high order backlog that is expected to lead to record earnings in the second quarter, and raised the target price by 16.7% from the previous 12,000 KRW to 14,000 KRW.
Jung Hongsik, a researcher at Ebest Investment & Securities, said, "The order backlog is an indicator that can estimate the scale of the next quarter," adding, "Since it takes about three months from order to delivery, the quarterly order backlog can be used to estimate the next quarter's scale (sales)." The first quarter order backlog reached 101.3 billion KRW, up 64.9% year-on-year, marking a historic high. This can be interpreted as a very high possibility that second quarter sales will be the highest quarterly level.
However, due to the rise in cost ratio, the proportion of raw materials to sales increased from 58.3% in the first quarter of last year to 60.0% in the first quarter of this year, and transportation costs (overseas export expenses) also rose significantly from 1.5 billion KRW to 3.4 billion KRW during the same period. This trend is continuing into the second quarter, so the profit aspect needs to be examined more closely.
Researcher Jung stated, "Looking at the increase in new orders, orders for automotive speakers are expanding not only with Hyundai Motor and Kia Motors but also through Alpine in the United States," and added, "Orders for TV speakers seem to be expanding with LG Electronics and Sony."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
