[Click eStock] "RFHIC Expected to See Earnings Growth on Robust Defense Sector... Target Price Raised"

On June 25, KB Securities upgraded its investment rating on RFHIC from 'Hold' to 'Buy', citing a recovery in long-sluggish telecom equipment sales and continued growth in the highly profitable defense sector. The firm also raised its target price to 32,000 won.

Lee Changmin, a researcher at KB Securities, analyzed, "RFHIC's annual revenue in 2025 is expected to reach 157.7 billion won, a 37% increase year-on-year, while operating profit is forecast to surge by 1,156% to 19.2 billion won." He particularly noted that RFHIC's power amplifier performance, driven by favorable conditions in the defense industry, would lead the company's growth.

Second-quarter results are also expected to show rapid growth. KB Securities estimated RFHIC's second-quarter revenue at 46.4 billion won, representing a 78% increase year-on-year and a 46% increase quarter-on-quarter. Operating profit is projected to reach 5.8 billion won, marking a return to profitability and a 55% increase compared to the same period last year.

By business segment, the telecom equipment division is expected to generate 15.7 billion won in revenue, a 103% increase year-on-year. The domestic defense sector is projected to grow by 80%, while the overseas defense sector is expected to expand by 70%. Lee assessed, "All major business segments are showing strong performance, and the operating profit margin (OPM) is anticipated to reach 12.4%, the second-highest level since 2020."

Lee further explained, "Reflecting improvements in the telecom equipment industry and growth in defense sales, we have raised our average return on equity (ROE) forecast for 2025 to 2034 from 7.3% to 10.7%." He added, "The current share price has a 37% upside potential relative to the target price." The previous day's closing price was 23,300 won.