[Click e-Stock] "UIEL, Steady Growth Despite Weak Industry Conditions"

Hana Securities analyzed on the 30th that UIEL shows valuation attractiveness by maintaining steady growth despite sluggish business conditions. No investment opinion or target price was provided.

Hana Securities expects UIEL to record sales of 109.8 billion KRW and operating profit of 5.4 billion KRW in the third quarter of this year, representing increases of 26.4% and 46.7% respectively compared to the same period last year. Choi Jae-ho, a researcher at Hana Securities, explained, "In the smartphone segment, the early production in the second quarter and the sluggish performance after the launch of the client’s new foldable model somewhat affected results, but thanks to existing models and the effect of new model launches, sales are expected to reach 96.7 billion KRW, continuing steady growth." He added, "In the electronic cigarette segment, sales are expected to continue steep growth with 10.1 billion KRW, driven by strong sales of Philip Morris’ ‘ILUMA I’ model launched in Japan in March this year."

Additionally, the company is preparing automotive components as a new growth engine. He said, "Furthermore, the company is setting up an automated process dedicated line at the Que Vo Industrial Complex in Bac Ninh Province, Vietnam, to produce automotive components for a global North American electric vehicle company, which has been under development for about two years." He noted, "It appears that facility investments were concentrated in the third quarter."

He emphasized, "As the equipment introduction is in its final stage, the reflection of investment costs is expected to be limited from the fourth quarter onward." He added, "Currently, sample quantities are being handled, and from the start of mass production in the first quarter of next year, it is expected to be fully reflected in performance."

Hana Securities forecasts that UIEL will record sales of 431.8 billion KRW and operating profit of 23.6 billion KRW next year, representing increases of 30% and 172.3% respectively compared to the previous year. He explained, "Despite a slowdown in set demand, UIEL continues differentiated growth compared to most other smartphone component companies expected to experience negative growth, through continuous discovery of new items." He added, "The client’s newly launched foldable special edition on the 25th of this month and two foldable models scheduled for release in China are expected to additionally contribute to sales growth in the fourth quarter."

He emphasized, "Regarding Philip Morris’ electronic cigarettes, it is understood that after inventory depletion until the third quarter of this year, purchase orders have been normalized since October, and following the launch of the flagship ILUMA I model in Japan, global launches are competing to follow." He forecasted, "With the expansion of launch countries, sales in the electronic cigarette segment are expected to exceed 28.6 billion KRW in 2023, 53 billion KRW in 2024, and 100 billion KRW in 2025."