[Post-IPO] Sekyung Hightech Stretching Its Performance

[Asia Economy Reporter Hyunseok Yoo] Sekyung Hi-Tech is emerging from a period of poor performance. Although it struggled last year due to COVID-19 and other factors, it is seeing a rebound in results this year thanks to the launch of foldable phones by its clients.

Sekyung Hi-Tech was established in 2006. It is a manufacturer of special films for smartphones. Its main product is Deco film, which is used on the front and back surfaces of smartphones. This film is produced to apply text or colors onto glass or plastic surfaces and plays a central role in smartphone film manufacturing.

The company went public on the KOSDAQ in 2019. At the time of its initial public offering (IPO), it planned to raise about 46 billion KRW to invest in building a second factory in Vietnam. However, the IPO was less successful than expected, raising only 27.7 billion KRW. Most of the funds raised were used for the construction and equipment investment of Sekyung Vina’s second factory in Vietnam.

With the capital raised from the public offering, Sekyung Hi-Tech significantly expanded its production capacity. The company’s product lineup is broadly divided into optical films, injection films, and Deco films. As of 2016, the annual production capacity for optical films was 12.3 billion KRW, which increased to 159.6 billion KRW last year. During the same period, injection films grew from 102.8 billion KRW to 108 billion KRW, and Deco films increased from 67.2 billion KRW to 228 billion KRW.

On a consolidated basis, sales revenue increased from 256.6 billion KRW in 2018 to 281.3 billion KRW in 2019. However, operating profit declined from 38.6 billion KRW to 23.4 billion KRW during the same period. Last year, the company’s performance slowed due to COVID-19, with sales of 220 billion KRW and operating profit of 2 billion KRW.

In the first half of this year, Sekyung Hi-Tech recorded sales of 102.9 billion KRW and an operating loss of 2.6 billion KRW. Sales increased by 4.03% compared to the same period last year, but losses continued. However, looking at the second quarter alone, sales reached 56.6 billion KRW, a 48.19% increase year-on-year, and operating profit turned positive at 400 million KRW. A company representative said, "Last year, sales to overseas clients were limited due to COVID-19. This year, we responded directly to clients through our China subsidiary, which had a positive impact."

Performance improvement is expected to continue in the second half of the year. This is because product sales are anticipated to increase with the launch of foldable phones by clients. Additionally, growth is emerging in a new product called GlassTic. Kiwoom Securities forecasts that Sekyung Hi-Tech’s sales and operating profit this year will reach 274.3 billion KRW and 16.1 billion KRW, respectively, representing increases of 25% and 700% compared to the previous year. A company representative explained, "The quantity of foldable phone-related products is increasing significantly. The GlassTic segment is also a new area that is seeing a growing volume."