Hana Securities analyzed on the 19th that Tobis' automotive electronics division is experiencing rapid growth. No investment opinion or target price was provided.
Tobis' automotive electronics division factories are divided into the Dalian factory in China with a production capacity (CAPA) of 300 billion KRW and the domestic Seocheon factory with a CAPA of 200 billion KRW. The newly expanded Seocheon factory began mass production in the second half of 2023, and the effects of the expansion are expected to be fully reflected starting this year.
Seongho Kim, a researcher at Hana Securities, said, "The Seocheon factory site is about 10,000 pyeong, and the factory itself is 1,810 pyeong in total. Considering future customer expansion, sufficient factory land has been secured." He added, "Currently, the first floor of the factory has three lines being expanded targeting production, with the first and second lines mainly producing automotive displays and integrated (curved) displays."
He continued, "As the number of expandable vehicle models is expected to increase, an additional production line on the second floor of the Seocheon factory will begin expansion in the second half of this year, with mass production expected by 2025. Ultimately, the factory is expected to expand to three lines on the first floor and two lines on the second floor."
Researcher Kim also anticipated that the continuous increase in new customers will be reflected in performance. He explained, "With the advent of the electric vehicle industry from internal combustion engine vehicles, the role of display companies within the automotive value chain is growing. Tobis is expected to benefit from the full-scale launch of its automotive electronics business."
He added, "New customers are also being actively secured. Tobis secured German automotive parts company Continental as a customer in May this year, and it is understood that vehicle model orders have been completed, with full-scale mass production expected to start in the second half of next year. Additionally, it is understood that product testing approval for Stellantis is in the final stages, and shipments of related volumes are expected to begin from the end of this year."
Hana Securities forecasted that Tobis' sales and operating profit this year will reach 642.8 billion KRW and 50.3 billion KRW, respectively, representing increases of 43.7% and 96.1% compared to the previous year. The researcher emphasized, "Due to the high profitability of the casino industry and the automation and yield improvement of the automotive electronics division's processes, quarterly profitability improvements are possible. We believe valuation re-rating is possible with the active reflection of performance related to new customer acquisitions."
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