[Click eStock] "Genoco, Synergy of KAI-Genoco Acquisition and a New Leap"

Hana Securities analyzed on the 24th that Zenoco is preparing for a new leap forward through acquisition synergy with Korea Aerospace Industries (KAI).

Zenoco is a specialized manufacturer of satellite communication components, primarily supplying optoelectronic cables, a core component of the military tactical information communication network (TICN). It participates in the national space development project and operates mainly in satellite payloads and avionics equipment. Its main products include ▲satellite payloads ▲satellite operating stations ▲avionics ▲EGSE inspection equipment ▲key defense components. Following Korea Aerospace Industries (KAI)'s decision to acquire management rights of Zenoco, it is expected to secure a final stake of 37.95%.

To proactively dominate space supremacy, major countries are expanding government support and private investment in the space industry. Due to technological advancements significantly lowering launch costs, the launch of small cluster satellites is expected to increase sharply. The small satellite market size is projected to grow from approximately $800 million in 2019 to about $2.5 billion by 2030, with an average annual growth rate of 12.1%.

Hanyugeon, a researcher at Hana Securities, stated, “With the increase in demand for small satellites, satellite data volume is rising sharply, leading to growing interest in ultra-high-speed transmission core components,” adding, “The X-band transmitter operates in the 8GHz to 12GHz band and is mainly used for high-resolution image transmission. Zenoco’s X-band transmitter supports a maximum transmission speed of 720Mbps, possessing world-class transmission technology.”

Zenoco’s products have acquired Space Heritage by being installed on the 1st and 2nd next-generation medium satellites, which had a budget of 306.9 billion KRW, and are expected to be installed on the upcoming 3rd, 5th, and 6th satellites as well.

Zenoco provides comprehensive total business solutions related to space, covering satellite payloads, satellite bodies, launch vehicles, and satellite ground stations. The researcher analyzed, “Considering the defense industry’s characteristics where QUL approval and reference acquisition are not easy, Zenoco’s supply references will act as a green light for securing competitiveness in overseas expansion,” and added, “In the rotary-wing sector, the development project of the Light Armed Helicopter (LAH) and the full contract and mass supply of the Landing Assault Helicopter Intercom (ICS) are expected this year, and positive results are anticipated in the next ANASIS-III project.”

He forecasted Zenoco’s sales and operating profit for this year to be 75.6 billion KRW and 3.9 billion KRW, respectively. Sales are expected to increase by 32.1%, and operating profit is expected to turn positive.

He stated, “The main factors driving performance growth are expected to be captive volume secured due to the transition to a major shareholder by Korea Aerospace, new satellite and defense contracts, an increase in order backlog, and partial reversal of provisions,” and projected, “With an expected increase in new orders due to project growth, Zenoco’s order backlog at the end of last year is estimated at about 97.3 billion KRW and is expected to expand to 120 billion KRW by the end of this year.”