[Click eStock] "Interplex, Expected to Return to Profit After 4 Years"

[Asia Economy Reporter Song Hwajeong] Daishin Securities maintained a 'Buy' rating and a target price of 17,000 KRW for Interflex on the 9th, expecting the company to return to profitability this year for the first time in four years and for the turnaround to gain momentum next year.

Operating profit for the fourth quarter of this year is expected to be 9.9 billion KRW, marking the second consecutive quarter of profit. Kangho Park, a researcher at Daishin Securities, said, "With strong fourth-quarter performance, we are revising our full-year operating profit forecast from a loss of 5.2 billion KRW to a profit of 500 million KRW," adding, "The company will turn from a deficit to a surplus for the first time in four years." Fourth-quarter sales are estimated at 140.4 billion KRW, a 62.9% increase compared to the same period last year.

The strong fourth-quarter results are attributed to continued robust sales of the Galaxy Z Fold3, launched last September, and the entry into production of the premium Galaxy S series in the first half of next year, along with an increased proportion of the Ultra model. Researcher Park explained, "The pen function is applied simultaneously to the Galaxy Z Fold3 and Galaxy S22 Ultra models, and Interflex exclusively supplies the essential digitizer (flexible PCB), which is expected to result in significant growth compared to the previous year," adding, "With Samsung Electronics' smartphone sales expected to increase next year, Interflex is expected to benefit from increased sales of premium Ultra and Galaxy Fold models."

The turnaround trend that began in the third quarter of this year is expected to expand further next year. Daishin Securities forecasts Interflex's operating profit to increase to 34.5 billion KRW next year and 40.9 billion KRW in 2023, following a return to profitability of 500 million KRW this year after four years. Sales are expected to grow rapidly, reaching 447.5 billion KRW this year, up 38.2% year-on-year, and 613.1 billion KRW next year, up 37%.

Positive effects from the restructuring of the flexible printed circuit board (PCB) market are also anticipated. Researcher Park stated, "Samsung Electro-Mechanics is expected to cease its flexible PCB business in the fourth quarter of this year, indicating ongoing restructuring among domestic flexible PCB companies," adding, "Considering that Isu Petasys also stopped its business (Isu Exaboard, flexible PCB) in the second quarter of this year and Daeduck Electronics is focusing on semiconductor PCB business, Interflex is expected to benefit from the flexible PCB sector."