[Click eStock] "BH, Growth Acceleration Expected in 2025... Target Price 30,000 Won"

Coverage Initiated with Investment Rating 'Buy' and Target Price of 30,000 Won

Shinhan Investment Corp. initiated coverage on BH with a 'Buy' rating and a target price of 30,000 KRW on the 9th.

Researcher Oh Kang-ho of Shinhan Investment Corp. stated, "We initiate coverage with a target price of 30,000 KRW," adding, "Based on the current stock price, the 2024 expected price-to-earnings ratio (PER) is about 5.5 times, which is undervalued compared to the low average of the past three years."

It is expected that earnings will recover this year and growth will accelerate from next year. Researcher Oh explained, "After poor performance in 2023, strong results were announced in the second quarter of this year. We view the recovery in IT device demand and expansion of the business portfolio as an opportunity to increase interest in mid- to long-term growth momentum."

The stock price is expected to show an upward trend. Researcher Oh said, "The reason we anticipate an upward trend in the stock price is that the AI market opening → expansion of IT device shipments → increase in IT component demand will lead to earnings growth," adding, "Expanding market presence based on technological competitiveness will lead to a revaluation of valuation."

BH is a producer of flexible printed circuit boards (FPCB), a core IT component, with its upstream market linked to global smartphone shipments and electric vehicle IT component demand. Researcher Oh analyzed, "Global smartphone shipments this year are estimated to grow 5% year-on-year, and growth acceleration is expected due to enhanced AI functions," adding, "Expansion of the OLED-applied device portfolio is also positive." He further added, "With increased orders related to electric vehicles, sales of automotive wireless charging modules (BH EVS) are expected to grow 18% this year, and diversification of the business model will result in stable quarterly performance."

Although sluggish global IT device shipments are considered a risk factor, demand weakness is expected to be limited. Researcher Oh said, "If global IT device shipments decline, adjustments to earnings estimates will be inevitable as a risk factor, but demand weakness will be limited due to form factor upgrades," emphasizing, "As a leading domestic IT component company, attention should be paid to earnings growth and high valuation appeal."