[Click eStock] "RFHIC, Benefiting from Both Earnings and Frequency Auctions... Target Price Raised"

On January 7, Hana Securities maintained its "Buy" investment rating on RFHIC and raised its target price from 40,000 won to 60,000 won, citing increasing demand for optical investments centered in the United States and the full-scale launch of long-term frequency supply. This represents a 60% upside potential compared to the previous day's closing price of 37,500 won.

On January 7, Kim Hongsik, a researcher at Hana Securities, stated, "This year, the U.S. frequency auction and new frequency investments by telecom operators are expected to begin in earnest." He also cited the increase in the price-to-book ratio (PBR) multiple used to calculate the target price to 4 times as a reason for the upward revision.

The key investment point highlighted was the U.S. frequency auction. Kim noted, "The U.S. administration is moving forward with a 4 GHz band frequency auction this year and is preparing additional frequency auctions for the years ahead," adding, "With new frequency supply and investments, the telecommunications equipment sector is increasingly likely to enter a long-term supercycle." He further stated, "Between 2026 and 2028, up to 800 MHz of new frequency allocations are expected in the United States, marking the largest short-term frequency allocation in history."

Last year's fourth-quarter earnings, which will be announced this month, are expected to exceed investor expectations and show solid performance. Kim projected, "even accounting for incentive payments, consolidated operating profit will reach 10.3 billion won, up 329% year-on-year."

The earnings growth trend for this year also looks positive. Kim said, "I still estimate this year's consolidated operating profit at 34.9 billion won, but this is a conservative estimate. Assuming defense sales are maintained, significant revenue growth is only natural." He stressed, "While RF Materials' sales to Lumentum are expected to double year-on-year, new frequency-related investments by U.S. telecom operators will also surge as time goes on."

Additionally, Kim commented, "It appears that RFHIC has already entered a supercycle for the period from 2025 to 2028. We may need to review U.S. export trends and adjust earnings forecasts upward accordingly." He added, "Given that new opportunities are emerging, especially in the U.S. market, there does not appear to be any concern about the valuation multiple."