[Click eStock] BH Falls After iPhone 14 Production Increase Withdrawal... "Should Be Seen as a Buying Opportunity"

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] Amid foreign reports that Apple has withdrawn its plan to increase production of the iPhone 14, securities firms analyzed that the decline in BH's stock price following these reports was excessive.

Meritz Securities stated on the 29th, "We believe there is no change in BH's fundamentals," providing this analysis.

The previous day, major foreign media outlets including Bloomberg reported that Apple had notified key component suppliers to cancel the production plan for an additional 6 million units of the iPhone 14 lineup in the second half of this year.

Following the report, stocks related to Apple's supply chain collectively fell, with BH closing at 27,150 KRW, down 6.70% (1,950 KRW) from the previous trading day. BH supplies flexible printed circuit boards (FPCB) for the iPhone 14 series.

However, according to the report, Apple maintained its production target at 90 million units, the same level as last year, citing strong demand for the Pro models. The iPhone 14 series is divided into standard models (iPhone 14, iPhone 14 Plus) and Pro models (iPhone 14 Pro, iPhone 14 Pro Max). Considering that demand for the higher-priced iPhone 14 Pro models exceeds that of the standard models, some suppliers are reportedly shifting production lines from standard model components to Pro model components.

Meritz Securities forecasted that BH would achieve higher-than-expected results for the third quarter of this year despite Apple's withdrawal of the production increase plan. Meritz Securities estimates BH's third-quarter sales at 439.6 billion KRW and operating profit at 58.8 billion KRW. These estimates assume supplying 80-85% of the initial 90 million units of the iPhone 14 series. Considering the rising exchange rates, Meritz Securities explained that BH is likely to exceed these estimates.

They also suggested the possibility of further upward revisions to BH's performance. Even if the iPhone 14 production increase does not occur, BH is expected to expand its market share among major clients. Meritz Securities predicted that BH would receive additional orders of at least 6 million units due to this market share expansion. However, they expect this to be reflected in results starting from the fourth quarter due to production capacity limitations.

They also forecast that BH's competitive edge in technology will be highlighted, as competitors may struggle to respond to the highly technical demands of the iPhone 14 Pro models.

Researcher Seungsoo Yang of Meritz Securities advised, "Considering the valuation and the shipment trends focused on the Pro models, we judge this to be an oversold period," recommending, "We suggest taking this as a buying opportunity."