[Click eStock] "Innowireless, Good Performance Expected Next Year but Stock is Undervalued"

Hana Securities analyzed on the 4th that Innowireless is expected to continue improving its performance next year following the fourth quarter of this year, but the current stock price is undervalued. The investment opinion 'Buy' and the target price of 47,000 KRW were maintained.

In the third quarter of this year, on a consolidated basis, Innowireless recorded sales of 49.6 billion KRW and operating profit of 4.5 billion KRW, representing increases of 92% and 150% respectively compared to the same period last year. Hong-sik Kim, a researcher at Hana Securities, said, "This is an earnings surprise much better than initially expected," adding, "The recovery in sales of test equipment such as big data devices was decisive."

The expected sales and operating profit for the fourth quarter are 71.9 billion KRW and 7.7 billion KRW, respectively. Sales are expected to increase by 16% compared to the same period last year, but operating profit is forecasted to decrease by 6%. He said, "From a profitability perspective, it will be difficult to show the same pattern as in the past," but emphasized, "Nevertheless, higher profits than in the third quarter are expected because sales will be at an all-time high."

He explained, "Many sales from each business division, including the telecommunications sector, have been deferred to the second half, so the consolidated sales in the fourth quarter are estimated to be higher than both the third quarter of this year and the fourth quarter of last year," adding, "Accordingly, it seems highly likely that Innowireless will maintain its profit trend in 2024."

He expected performance improvement to continue next year as well. He emphasized, "Remarkable performance improvement is expected in 2025 because although profitability will not be as good as before, sales will surge," and added, "In the telecommunications equipment sector, the main factors for sales growth are expected to be the expansion of small cell sales in Japan and North America, increased defense sales after joining the LIG Group, and increased automotive electronics sales after acquiring Myeongseong Lifix."

He explained, "Frequency auctions are expected to resume mainly in Korea and the United States in the second half of 2025, and the anticipation of a sharp increase in sales in 2026 is expected to be reflected in the stock price," adding, "Looking ahead over the next year, being able to buy Innowireless at the current price-to-book ratio (PBR) of 0.8 times can be considered a kind of fortune."