[Click eStock] "IlanTech, New Business Sales High Growth... Oversold for Optimal Buying Opportunity"

[Asia Economy Reporter Kwon Jaehee] Hana Securities maintained its 'Buy' rating on IrenTech on the 7th but lowered the target price from the previous 34,900 KRW to 27,700 KRW. Although the target price was downgraded due to sluggishness in the upstream industry, it is analyzed as an optimal buying opportunity due to expected high sales growth in new business areas and recent excessive price declines.

IrenTech achieved consolidated sales of 277.3 billion KRW and operating profit of 20.9 billion KRW in the second quarter. Its main business divisions recorded sales of 73.4 billion KRW from smartphone cases and 93.7 billion KRW from electronic cigarette devices. Operating profit slightly missed market expectations due to the slowdown in the smartphone market and one-time logistics costs, but increased by 424% year-on-year thanks to the base effect and strong performance in new businesses. The major new business, home ESS, began full-scale operations in June and is expected to reflect positively in the second half of the year. With the ongoing energy crisis in Europe, demand for home ESS is surging. The company plans to operate a second production line from the end of this year and produce ESS battery packs from two lines starting next year. Since 2022, the sales proportion of phone cases is expected to decline from the previous 50% range to 30%, signaling a transformation into a battery-related company in the future.

Accordingly, IrenTech's consolidated sales and operating profit for this year are projected to increase by 31.6% and 129% year-on-year to 1 trillion KRW and 78.3 billion KRW, respectively. In the second half, sales related to battery packs are expected to surge due to the positive impact of home ESS sales, the start of local demand response for mobility battery packs in India, and the commencement of battery pack production for service robots.

Kim Kyusang, a researcher at Hana Securities, said, "Although the target price was lowered due to EPS fluctuations caused by the slowdown in the upstream smartphone market, the 'Buy' rating was maintained because high sales growth is expected in electronic cigarettes, home ESS, and serving robot battery packs," adding, "Recent excessive price declines have further increased valuation attractiveness, making it an optimal buying opportunity."