[Click eStock] "Saekyung Hightech, Excessive Undervaluation Despite Earnings Slowdown... Target Price Down"

Target Price Downgraded from 11,000 Won to 8,000 Won

NH Investment & Securities evaluated Sekyung Hi-Tech on the 11th as being in an excessively undervalued range despite considering a slowdown in earnings. The target price was lowered from the previous 11,000 KRW to 8,000 KRW, taking into account the sluggish smartphone sales of its client companies, while maintaining a 'Buy' investment rating.

Researcher Lee Kyu-ha of NH Investment & Securities explained, "We lowered the target price considering the worsening smartphone sales of domestic clients, and maintained the investment rating considering the possibility of diversifying the foldable business to North American clients. We also reflected the downward trend in parts volume due to the decrease in client shipments, revising Sekyung Hi-Tech's operating profit for 2024 and 2025 down by 9.5% and 19.1%, respectively."

Domestic client sales have recently been slowing not only in high-end flagship models but also in mid- to low-priced segments. The researcher stated, "The focus has shifted more towards cost reduction than product completeness, weakening competitiveness, and consumers seem to have started to feel this."

The third-quarter earnings are expected to fall short of previous estimates. The researcher said, "Sekyung Hi-Tech's third-quarter operating profit is projected to record 9.4 billion KRW, a 31.2% decrease compared to the same period last year, falling short of our previous estimates. The main causes are the slowdown in client sales and the decline in exchange rates."

However, despite the earnings slowdown, the current stock price is considered excessively undervalued. The researcher analyzed, "With North American companies expected to launch foldable smartphones in the second half of 2026, Sekyung Hi-Tech is highly likely to enter as a supplier, indicating high mid- to long-term growth potential. Additionally, due to the recent stock price decline, the price-to-earnings ratio (PER) for 2025 has dropped to 8 times, presenting valuation attractiveness."