[Click eStock] "Novatech, Expanding Foldable Phone Sales"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 26th that it has given a buy rating and a target price of 59,000 KRW for Novatech, citing the expansion of foldable phone sales and the possibility of entering the electric vehicle electronics and secondary battery markets.

Novatech is a specialized developer of permanent magnet application products, developing and producing magnetic components for various electronic devices (smartphones, tablet PCs, wireless charging pads, etc.) based on core shielding magnet technology.

Researcher Kim Gyu-sang of Hana Financial Investment said, "Novatech has secured a dominant position in supplying magnets for customers' tablet PCs, and this year is expected to benefit from increased shipments by customers," adding, "As foldable phone supply expands, it is highly likely to be included as a foldable phone-related stock, raising expectations for valuation rerating."

He also pointed out that attention should be paid to the movements of Android phone manufacturers following Apple's MagSafe implementation. Researcher Kim said, "Based on their past actions, it is highly likely they will adopt a similar magnetic system," and "If adopted, Novatech has the potential to achieve sales growth beyond Hana Financial Investment's estimates."

Novatech has also entered the automotive electronics business. Each customer is a major vendor for global automakers, and Novatech is expected to be incorporated into the supply chain for electric vehicles and autonomous driving in the future. The company is preparing to enter the secondary battery deironing business, securing mid- to long-term growth momentum.

The company's sales for this year are projected at 108.6 billion KRW, with an operating profit of 40.3 billion KRW, exceeding the previous year by 19.6% and 21.8%, respectively. Of the expected 34 million tablet shipments this year, it is assumed that Novatech supplies shielding magnets for 35%, or 11.9 million units, and for the expected 13 million foldable phone shipments this year, Novatech's market share is assumed to be 50%.

Researcher Kim said, "The Galaxy Tab S8 is scheduled for release in early February, and the Galaxy Fold Flip is planned for the third quarter, so sales are expected to be evenly distributed until the end of the year, but the first quarter sales are expected to be the highest."