[Click eStock] "Wysol Faces 1Q Slump Due to Intensified Competition, Demand Recovery Hopes Remain"

Operating Profit Expected to Drop 57% Year-on-Year in 1Q
Profitability Worsens Amid Intensified Competition
Chinese Market Demand Expected to Increase... Annual Performance Forecast to Hold Up

Ysol is expected to post somewhat sluggish results in the first quarter of this year. The competition in the RF filter market has intensified, leading to a deterioration in profitability. However, demand recovery driven by strong smartphone sales in China is also anticipated.

On the 21st, KB Securities maintained its 'Buy' rating and target price of 9,000 KRW for Ysol based on these factors. The closing price the previous day was 6,450 KRW.

The first-quarter results for this year are forecasted at 92.9 billion KRW in sales and 2.7 billion KRW in operating profit, representing declines of 16% and 57%, respectively, compared to the same period last year. It is expected to slightly miss market consensus estimates. Considering it is a peak season, this is seen as disappointing. Regarding Samsung Electronics' performance, while Galaxy S25 sales are solid, the sales of the budget A-series products have yet to rebound, which has been a drag. OEM performance for Chinese brands such as Oppo, Vivo, and Xiaomi is also understood to be experiencing price declines and profitability deterioration due to intensified competition in the RF filter market.

However, the full-year performance is expected to hold up well. KB Securities projects annual sales of 368.3 billion KRW and operating profit of 10.9 billion KRW, with sales decreasing by 2% year-on-year but operating profit increasing by 2,269%. Although intensified competition in the Chinese RF filter market is a negative factor, the increase in models equipped with high-value-added HS filters is expected to improve the product lineup. The spread of on-device AI and increased sales of flagship smartphones are also seen as positive factors.

In particular, the rebound in the Chinese smartphone market, which accounts for 45% of total sales, is viewed positively. According to market research firm Counterpoint Research, smartphone sales in China in January this year reached 291 million units, up 41% from the previous month and 18% year-on-year. The effect of the "Yi Gu Huan Xin" policy, which provides purchase subsidies of up to 500 yuan for products priced below 6,000 yuan (approximately 1.2 million KRW), is benefiting local Chinese companies.

Lee Chang-min, a researcher at KB Securities, explained, "Strong demand in the Chinese smartphone market is expected to continue for the time being," adding, "Ysol's performance, which has a high sales proportion in China, will gradually show signs of recovery."