[Click eStock] "Abiko Electronics, Subsidiary Expected to Rebound as Early as Q2"

Shinhan Financial Investment "Abico Electronics Target Price Raised from 10,000 Won to 11,000 Won"
Transition to DDR5 is the Key Momentum

(Provided by Shinhan Financial Investment)

[Asia Economy Reporter Gong Byung-sun] There are expectations that Abico Electronics' performance will rebound in the second quarter of this year. There is also optimism that its subsidiary could see a turnaround as early as the second quarter. Shinhan Financial Investment has raised the target price for Abico Electronics from 10,000 KRW to 11,000 KRW, maintaining a 'Buy' rating.

According to Shinhan Financial Investment on the 17th, Abico Electronics' sales for the second quarter of this year are expected to increase by 6% year-on-year to 36.9 billion KRW. Operating profit is forecasted to rise by 88% to 1.7 billion KRW. Although the company recorded an operating loss of 1.9 billion KRW last year, it is projected to post operating profits of 6.9 billion KRW this year and 11.4 billion KRW next year.

Shinhan Financial Investment explained that there are four rebound momentum factors. First, profitability could improve due to a turnaround in its subsidiary. Abico Electronics' subsidiary, Abico Tech, is expected to return to profitability as early as the second quarter due to fixed cost reductions, customer diversification, price adjustments of substrates, and an increased proportion of automotive electronics. Researcher Park Hyung-woo from Shinhan Financial Investment said, "Abico Tech's annual operating loss is expected to decrease from 7.5 billion KRW last year to 400 million KRW this year," adding, "In addition, Abico Tech is reviewing multiple new businesses beyond its existing automotive substrate business, enabling business diversification."

The core business is also expected to be promising. Abico Electronics is favorable in passive components. Currently, the base effect is also effective, and a lower-high pattern is expected on a semiannual basis. The key momentum is the transition from DRAM to DDR5. Researcher Park explained, "The transition to DDR5 will bring a trickle-down effect from the DDR5 trend that will continue for several years," but added, "However, the adoption volume and supply price of power inductors in DDR5 are still uncertain."