[Click e-Stock] "Estec, a Beneficiary in the Era of Electric Vehicle-Based Autonomous Cars"

On June 18, KB Securities analyzed that Estec is emerging as a beneficiary of the expanding electric vehicle-based autonomous vehicle market.

Estec operates in the automotive, home TV, audio, and other components businesses, and currently runs five subsidiaries across four countries, including Vietnam and China. The company holds more than 150 patents, which is considered to provide a technological entry barrier.

In the first quarter of this year, Estec reported sales of 119.4 billion KRW, up 17.9% year-on-year, and operating profit of 12 billion KRW, up 38.4%, achieving an operating margin of 10.1%. Kim Hyungyeom, a researcher at KB Securities, evaluated, "Growth in automotive sales to China and a strategy to diversify the customer base led to simultaneous sales growth and profitability improvement, raising the operating margin above 10%."

The growth potential of Estec can be found in the expansion of the automotive speaker market driven by the spread of electric vehicles and autonomous vehicles. In the era of autonomous vehicles, in-car audio systems are evolving beyond simple music listening to immersive entertainment, personalized information delivery, and communication functions. Researcher Kim explained, "While global finished car manufacturers equip an average of 4 to 6 speakers per vehicle for basic models and 8 to 14 for premium models, leading Chinese electric vehicle manufacturers are now installing 8 to 12 speakers in basic models and more than 20 in premium models."

This market shift has also been reflected in Estec's performance. In the first quarter of this year, sales to China reached 33.3 billion KRW, a sharp increase of 118.6% year-on-year. Researcher Kim stated, "We are focusing on Estec's mid- to long-term sales growth driven by the expansion of the electric vehicle market in the future."

In addition, positive changes are expected in terms of shareholder return policy. Estec's largest shareholder, Japan's Foster Electric, announced that it would raise its dividend payout ratio from the previous 30% of controlling shareholders' net profit to 40%, aiming to achieve a P/B ratio of at least 1 by 2027. Accordingly, Estec is also expected to increase its dividend payout ratio and dividends per share. Researcher Kim analyzed, "There is also the possibility of the new administration's pledge to mandate share buyback cancellation for listed companies," adding, "Currently, Estec holds 22.9% of its total shares as treasury stock, which deserves attention."