[Click eStock] "BH Benefits from Increased Market Share within Client Companies"

Positive Results in Both Domestic and North American Markets
KB Securities Maintains BH Target Price at 24,000 Won

[Asia Economy Reporter Gong Byung-sun] BH posted third-quarter results this year that slightly exceeded market expectations (consensus). It showed favorable trends in both the domestic and North American markets. From next year, it is expected to benefit from increased market share within its client companies.

According to KB Securities on the 27th, BH's third-quarter sales this year reached 333.7 billion KRW, up 41% compared to the same period last year, and operating profit increased by 44% to 43.7 billion KRW. These figures surpassed the consensus by 3.1% and 8.8%, respectively.

Positive results were seen in both domestic and North American markets. For domestic clients, sales of foldable phones, which have higher component unit prices, continued to perform well. Additionally, sales exceeded estimates due to mid-end smartphone-related performance and increased operating rates at the Chinese factory.

In North America, performance improved significantly as the launch schedule of flagship smartphones, which are prominently promoted, normalized. Although shipments of 2021 models by North American clients decreased by 10% compared to last year, BH's sales to North American clients from the third quarter of this year through the second quarter of next year are estimated to increase by 27% year-on-year.

Lee Chang-min, a researcher at KB Securities, explained, "Instead of the mini model, which had poor sales, we are supplying rigid-flex printed circuit boards (RFPCB) mainly for the Pro and Pro Max models," adding, "Both supply volume and average selling price (ASP) are showing favorable trends compared to the same period last year."

It is expected to benefit from increased market share within client companies in the future. As Samsung Electro-Mechanics, a competitor, withdraws from the RFPCB business, BH's market share within Samsung Display is expected to increase from the existing 55% to 70%. This is also expected to lead to sales expansion for major domestic and North American clients.

The researcher said, "There are possibilities of production disruptions due to semiconductor supply shortages and power outages in China," but added, "Even if unexpected order cuts occur from clients, considering the high brand loyalty of the core consumer base of North American clients, demand will not disappear but be deferred."

Accordingly, KB Securities maintained its investment opinion of "Buy" on BH with a target price of 24,000 KRW. The closing price on the previous day was 18,650 KRW.