[Click eStock] "Samyoung Electronics, Cash Exceeding Market Cap... Supplying Semiconductor and Automotive Condensers"

[Asia Economy Reporter Hyungsoo Park] Research Alom analyzed on the 24th that Samyoung Electronics' performance, which had been stagnant for five years, is improving. The appropriate stock price was suggested to be 18,200 KRW.

Donghyun Lee, Senior Researcher at Research Alom, stated, "Samyoung Electronics' performance has started to improve due to pent-up demand from COVID-19," adding, "From October this year, they plan to supply capacitors for SSDs to Company S, and an increase in operating profit margin is expected due to the expansion of the front-end industry."

Samyoung Electronics plans to supply aluminum capacitors for industrial SSDs of Company S starting from the fourth quarter of this year. Lee said, "Currently, the main factory is expanding the production line for semiconductor capacitors," and "If it passes the quality test in September, supply is expected to begin in October." He added, "Although the initial supply volume is uncertain, the company's success in supplying in a market monopolized by Japanese companies is significant."

Securing a reference for supplying semiconductor capacitors may lead to additional orders from other clients. In the second half of the year, the company will take over domestic automotive customer volumes from its parent company, Japan Kemicon. Profit margin improvements due to the growth of the electric vehicle market can also be anticipated.

Lee explained, "The main suppliers of automotive capacitors for domestic automakers are Japanese companies," and "Samyoung Electronics plans to receive technology partnerships and transfer automotive capacitor volumes from its parent company, Japan Kemicon, to Korean customers." He added, "Samyoung Electronics supplies automotive products to LG Electronics, Hyundai Mobis, Hyundai Motor, and Kia, generating approximately 20 billion KRW in annual sales."

He analyzed, "Samyoung Electronics currently holds 265 billion KRW in cash equivalents," and "Considering the cash holdings, the stock price is absolutely undervalued." Furthermore, he predicted, "This year’s stagnant operating profit is at a turning point for a level-up, and if attractive new businesses are discovered based on abundant cash, the stock price increase will be greater."