[Click eStock] "Expansion of Foldable Products... Buy Rating for KH Vatec"

Shinhan Investment Corp. maintained a buy rating on KH Vatec on the 6th, stating that "performance growth is expected to accelerate further with the recovery of the smartphone market." However, it revised the expected earnings per share (EPS) for next year from 2,275 won to 1,846 won, and lowered the target stock price to 21,000 won due to changes in the estimated year and adjustments in estimates.

On the day, researchers Oh Kang-ho and Park Yoon of Shinhan Investment Corp. stated, "KH Vatec's sales next year are expected to increase by 18% from this year to 463.1 billion won, and operating profit is forecasted to rise by 26% to 45.8 billion won," adding, "There are sufficient new growth drivers such as the expansion of foldable product sales and changes in cases." They also said, "Next year is a period where consumer needs can be expected to expand due to hardware and software product upgrades," and "Operating profit margin is expected to be 9.9% as a result of increased product sales."

KH Vatec is an information technology (IT) device company with competitive metal parts processing technologies such as die casting and CNC. It supplies internal and external parts for IT devices such as smartphones and laptops, mainly producing foldable hinge parts for smartphones, making it a representative beneficiary of foldable products. Investors have high interest in its performance and stock price in line with the launch of foldable products.

Researcher Oh said, "Next year, in addition to the existing foldable business area, the supply of titanium cases is expected to be in full swing. This is a factor that can alleviate the existing quarterly performance volatility," adding, "Additionally, the expansion of metal case adoption in budget smartphones is also an expected growth factor."

He continued, "With expectations for the introduction of titanium cases next year, we lowered sales of existing bracket parts and raised other sales. Profitability improvement is also expected through the expansion of high-value-added product sales," and added, "The existing investment point, foldable, is also noteworthy. Sales of foldable smartphones are expected to continue high growth. Along with the expansion of global smartphone companies' entry, quality is also being enhanced."