[Click e-Stock] "Hecto Innovation to Sustain Earnings Growth...B2C Business to Become More Concrete in Second Half"

Yuanta Securities analyzed on July 7 that Hecto Innovation is expected to maintain its growth trajectory, with the B2C (business-to-consumer) segment becoming more concrete in the second half of the year. The firm did not provide an investment opinion or target price.

In the first quarter, Hecto Innovation's revenue and operating profit increased by 6.5% and 19.2%, respectively, compared to the same period last year. Kwon Myungjun, a researcher at Yuanta Securities, stated, "In 2009, the company launched a mobile phone number theft prevention service, which it supplies to the three major telecommunications companies. It also provides services such as daily personal information monitoring alerts and blocking of financial transaction accidents. Due to the SKT hacking incident, it is estimated that more than 500,000 subscribers switched telecommunications providers. As a result, the previously stagnant revenue from personal information protection services is expected to improve in the second half of the year."

He added, "The company has maintained its revenue growth by launching new services every year. This year, with an increased number of new services compared to last year, revenue growth is also expected to continue."

He further noted, "Subsidiary Hecto Healthcare's product, Doshimone, continues to perform well in sales. With plans to enter the Chinese market in earnest in the second half, the company is expected to transition from a domestic-focused company to an export-oriented one."

He also expressed expectations that the B2C business will become more concrete in the second half of the year. He said, "The company owns B2C mobile applications such as Ballosoduk and TheSsenCard, each with more than 1 million cumulative downloads. Currently, Hecto Innovation is working to advance its B2C platform business and plans to disclose specific business details within the year. The company is also expected to further expand into the B2C market by strengthening synergies between its app services."

Recently, Hecto Innovation announced a plan to acquire 8 billion won worth of its own shares, totaling 557,000 shares. This represents approximately 4.2% of the total number of shares outstanding (13,125,000 shares). The share buyback is seen as being aimed not only at stabilizing the stock price but also at enhancing shareholder value through profit cancellation. The acquired shares are expected to be retired in the future. Kwon commented, "It appears that the purpose of the share buyback is focused more on enhancing shareholder value than on stabilizing the stock price. Hecto Innovation's shareholder return policy is being strengthened compared to the past."