[Click eStock] "BH, Temporary Profitability Decline Expected"

Target Price Lowered from 22,000 KRW to 21,000 KRW

KB Securities has downgraded the target price of BH from 22,000 KRW to 21,000 KRW, citing an expected temporary decline in profitability during the process of diversifying its customer base. The investment rating remains 'Buy.'

BH recorded sales of 487.9 billion KRW in the fourth quarter of last year, down 6% year-on-year, and posted an operating loss of 5.3 billion KRW, turning to a deficit. Lee Chang-min, a researcher at KB Securities, explained, "Sales of wireless chargers for vehicles exceeded expectations, but sales to North American customers for smartphones were somewhat sluggish due to a decline in average selling price (ASP). Shipments to a new North American customer for OLED tablets were lower than expected, resulting in a decline in overall sales compared to the previous quarter." He pointed out that profitability was weak due to initial costs and one-time expenses such as performance bonuses associated with the new operation of the IT OLED line, which affected the operating profit margin.

For BH's first quarter sales this year, it is estimated to be 324.3 billion KRW, up 9% year-on-year, while operating profit is expected to drop 93% to 600 million KRW. The researcher diagnosed, "Although the performance for North American customers' smartphones, which had a low base, is expected to improve compared to the same period last year, the improvement in profitability is expected to be limited due to the seasonal off-season characteristics."