[Click eStock] "Genohco: Anticipated Positive Impact from KAI Acquisition"

Eugene Investment & Securities analyzed on August 28 that the acquisition of Genohco by Korea Aerospace Industries (KAI) is expected to have a positive impact. The company did not provide an investment opinion or target price.

Genohco recorded sales of 14 billion KRW in the second quarter, marking a 21% increase compared to the same period last year. However, the company continued to post an operating loss, recording an operating deficit of 1.4 billion KRW. Jeong Heehoon, a researcher at Eugene Investment & Securities, stated, "The satellite communications division achieved growth both quarter-on-quarter and year-on-year," adding, "However, the high proportion of low-priced order sales and increased development costs in some projects led to continued losses."

He explained, "Genohco has maintained a high order backlog since last year, which has been significantly influenced by the expansion of PSU business orders in the satellite communications segment. Currently, satellites equipped with PSUs supplied by Genohco have entered the FM stage of development, so the company is expected to see improved cost ratios as we move into the fourth quarter."

He continued, "On July 1, the acquisition process by KAI was completed, making KAI the largest shareholder of Genohco. As a result, Genohco now has a higher likelihood of securing orders for aerospace components from KAI in the future. Recently, the company has also been strengthening partnerships with global clients based on its domestic track record of satellite and aircraft component orders."

He emphasized, "Due to weak performance and new orders in the first half of the year, the stock price declined somewhat. However, there is strong anticipation for a turnaround to operating profit in the second half, driven by the expansion of satellite business performance, as well as a meaningful possibility of securing aerospace-related orders following the KAI acquisition."