ITM Semiconductor Estimates Annual E-Cigarette Sales of 100 Billion Won

[Asia Economy Reporter Jang Hyowon] KB Securities analyzed on the 2nd that ITM Semiconductor's sales related to electronic cigarette original equipment manufacturing (OEM) will generate approximately 100 billion KRW annually.

ITM Semiconductor announced on the 21st that a global production line for KT&G's electronic cigarette hybrid model and new liquid cartridge products has been completed. ITM Semiconductor has established a global production line at its headquarters and Vietnam subsidiary capable of producing 3 million units of the new hybrid model annually.

ITM Semiconductor is a company that manufactures secondary battery protection circuit products, secondary battery battery packs, and sensor products. As a new business, it signed a new supply contract with KT&G in August last year for electronic cigarette hybrid models and liquid cartridges.

Sales and operating profit of existing businesses are also on the rise. According to KB Securities, ITM Semiconductor's fourth-quarter performance last year is estimated to be 205.8 billion KRW in sales and 13.7 billion KRW in operating profit, representing increases of 52% and 50% respectively compared to the same period last year.

Lee Changmin, a researcher at KB Securities, analyzed, "Sales to North American customers for smartphone models are increasing due to the expansion of supply models," and added, "Also, a North American customer launched a new wireless earphone product in October last year after two years, so sales expansion is expected."

This year, sales from electronic cigarettes will be added to existing protection circuit sales, driving performance improvement. The researcher said, "This year, ITM Semiconductor's sales and operating profit are expected to increase by 52% and 496% to 772.9 billion KRW and 48.9 billion KRW respectively," and analyzed, "The expansion of sales proportion in the highly profitable new business will dilute the poor profitability of smartphone-related performance."

However, he added, "Due to the continued poor profitability of PMP for major customers' smartphones caused by rising costs and fixed cost burdens, the average return on equity (ROE) is revised downward from 16.9% to 15.7% until 2030, and the target stock price is also lowered by 13% to 52,000 KRW."