[Click eStock] "RFHIC Likely to Turn a Profit This Year... Excessive Undervaluation Phase"

Hana Securities analyzed on the 23rd that RFHIC is highly likely to turn a profit this year, and the current stock price is excessively undervalued. They maintained a 'Buy' investment rating and a target price of 40,000 KRW.

Hana Securities forecasted that RFHIC will continue to post an operating loss of 100 million KRW on a consolidated basis in the third quarter of this year. However, they expected a turnaround to an operating profit of 7.7 billion KRW in the fourth quarter.

Kim Hong-sik, a researcher at Hana Securities, stated, "Despite the continued sluggish sales in the telecommunications sector, sales in the defense sector are rapidly increasing," adding, "Even considering seasonal effects, solid performance is expected." He further said, "Based on the third quarter earnings estimates and fourth quarter profit outlook, there is a high possibility that RFHIC will achieve consolidated operating profit in 2024."

He explained, "The performance outlook for RFHIC in 2025 is also bright," noting, "There is an increasing possibility of sales to India Vodafone through Samsung Electronics in the first half of the year, and exports to the United States, along with domestic sales, are likely to resume in the second half."

In particular, he anticipated entering a big cycle in the second half of next year. He projected, "The opportunity markets for RFHIC in 2025 will be India, domestic, and the United States," adding, "Samsung Electronics has already secured an order worth 1 trillion KRW from India Vodafone, so sales from RFHIC as a supplier are expected to begin as early as the beginning of 2025. Above all, the domestic and U.S. frequency auctions are expected to drive significant performance improvements after the second half of 2025."

He explained, "The scale of frequency allocation is not small, which raises great expectations," noting that although the domestic frequency auction was delayed from the end of this year to the fall of 2025, reports suggest the possibility of broadband allocation."

He continued, "The supply of new frequency bands in 2018 acted as an opportunity factor for telecommunications equipment companies including RFHIC," emphasizing, "Considering the high possibility of entering a big cycle in the second half of 2025, being able to buy RFHIC at a stock price level below a PBR of 1 is clearly an opportunity."