[Click eStock] "Deokwoo Electronics, Sales Diversification Expected... Possible Stock Price Revaluation"

NH Investment & Securities stated on the 22nd that "Deokwoo Electronics is expected to diversify its sales through secondary battery components and extended reality (XR) in the future. Performance improvement is anticipated due to a reduction in new business-related costs, leading to a potential stock price revaluation." No specific investment opinion or target price was provided.

Deokwoo Electronics operates in the North American mobile parts (80%) and automotive parts (20%) sectors. It produces structures such as stiffeners (which prevent foreign substance intrusion and block electromagnetic waves) and brackets (which enhance the durability of multi-camera modules) used in smartphone camera modules for smartphone manufacturers, and supplies automotive electronic parts including anti-lock brake systems (ABS) and electric motor-driven power steering (EPS) motors.

On the same day, Lee Gyuha, a researcher at NH Investment & Securities, said, "In the past, the company had a high proportion of North American clients and experienced significant performance volatility due to competition with Chinese companies. However, mid- to long-term performance growth is expected through product diversification such as secondary battery components and XR." He added, "In particular, it is highly likely that the North American client will launch a product in February next year. Deokwoo Electronics, which is expected to supply structures related to camera modules, will attract attention."

The researcher predicted, "Secondary battery components will begin production in the second half of next year, with sales starting in earnest from 2025." He also expected, "In the mid- to long-term, the sales proportion of secondary battery components will grow to a level similar to the existing core mobile business."

He continued, "Performance showed losses until the third quarter of this year due to increased costs related to new businesses and a decline in the KRW-USD exchange rate. However, from the fourth quarter, costs are expected to decrease, leading to performance improvement." He added, "Thanks to cost reductions next year, operating profit is expected to turn positive at 14.3 billion KRW." Furthermore, he said, "The full-scale growth will come in 2025 when secondary battery components and XR expand," adding, "With next year's performance recovery and attention on XR and electric vehicle parts, stock price revaluation is possible."