[Click e-Stock] "Rino Gong-yeop, Clear Trend of Profitability Improvement... Target Price '↑'"

SK Securities analyzed on the 12th that the profitability improvement trend of Rino Industrial is clear. The investment opinion was maintained as 'Buy,' and the target stock price was raised to 280,000 KRW.

Rino Industrial recorded sales of 58 billion KRW and operating profit of 30.2 billion KRW in the fourth quarter of last year. This represents increases of 12% and 92%, respectively, compared to the same period last year. Dongju Lee, a researcher at SK Securities, explained, "The operating profit margin reached an impressive 52%, which is due to the mix improvement effect from the increased proportion of sockets for research and development (R&D)." He added, "While the volume of mass-produced sockets for mobile devices was sluggish, the volume of new projects related to R&D remained solid."

SK Securities expects demand for Rino Industrial to emerge from on-device artificial intelligence (AI) to customized AI. He said, "This year will see significant specification changes in the hardware market, from AI smartphones to AI laptops," adding, "The integration of lightweight large language models (sLLM) within devices and the advancement of application processors (AP) and central processing units (CPU) to support this are inevitable."

He estimated, "The number of pins at the AP level will increase by at least 20%, and similar changes are expected in CPUs," emphasizing, "In the small and medium device market, socket fine-pitch technology and high reliability are unique areas possessed only by Rino Industrial, leading to improved socket unit prices and profitability."

He explained, "In addition to smartphones, orders for research and development within client companies are increasing for extended reality (XR), automotive system-on-chip (SoC), and server-oriented AI graphics processing units (GPU), with some transitioning to mass production," and added, "In the future customized AI market, as shipments of specialty chips rather than general-purpose ones increase, sockets are expected to form a supplier-dominant market." He further added, "Connections with major big fabless customers preparing for this are also expected to strengthen."