[Click eStock] "BH, Expected Performance... Improvement Anticipated in Second Half"

Hana Securities Report

Hana Securities maintained a buy rating and a target price of 34,000 KRW for BH on the 8th.

In the first quarter, BH's sales amounted to 313.9 billion KRW, and operating profit was 8.9 billion KRW, down 14% and 60% respectively compared to the same period last year. While sales were better than market expectations, operating profit was sluggish due to ongoing cost issues in the newly acquired BH EVS (vehicle wireless charging module business) from LG Electronics. Kim Rok-ho, a researcher at Hana Securities, stated, “Sales to the main business division in North America were favorable, but domestic client sales fell short of forecasts due to a shortage in smartphone shipments. Sales of EV-related BMS cables recorded over 10 billion KRW per quarter.”

For the second quarter, BH's sales are expected to be 315 billion KRW, and operating profit 9.8 billion KRW, down 7% and 59% year-on-year respectively. This is because the sales of the iPhone 14 series were weaker than its predecessor, making the first half performance inevitably worse than the same period last year. Domestic client volumes are expected to decline compared to the previous quarter, but the decrease is estimated to be minimal as supply volumes related to the foldable phone, scheduled for release in the third quarter, are factored in.

Researcher Kim Rok-ho analyzed, “However, with strong performance in the vehicle wireless charging module segment, the overall sales decline will be mitigated compared to the past. Sales to North American clients are expected to slightly increase due to the base effect and the start of component supply for new models.”

He added, “The profit decline in the first half was anticipated since the end of last year, so the results within the forecast range should be considered a solid performance. In the second half, BH EVS is expected to contribute to profits, leading to improved performance.” Furthermore, it is predicted that next year, the client will begin supplying OLED for tablets, enabling additional external growth.