[Click eStock] "KMw, Supplies Equipment to Japan Rakuten... Q2 Earnings Turnaround"

[Asia Economy Reporter Minji Lee] Ebest Investment & Securities maintained a buy rating on KM Double U on the 19th, expecting an increase in second-quarter earnings. The target price was set at 56,000 won, down 30% from the previous price to reflect the impact of the novel coronavirus infection (COVID-19).

The company announced yesterday that its subsidiary, KMW Japan, signed a supply contract for 4G RRA and RTS equipment. This equipment is scheduled to be supplied to Rakuten Mobile through KMW Japan. The confirmed contract amount is 89 billion won.

Researcher Wangjin Lee of Ebest Investment & Securities said, “The order timing is estimated to be in the second quarter, and revenue recognition will be reflected in the second-quarter earnings.” He added, “The scale of the supply contract signed this time is about 29,000 units, and operating profit of approximately 10 to 13 billion won is expected to be reflected.”

The company's expected sales this year are 1.1 trillion won, and operating profit is expected to increase by 56% and 51%, respectively, compared to the same period last year, reaching 208.7 billion won. As sales to Rakuten Mobile increase, annual sales are also expected to rise significantly.

Researcher Wangjin Lee explained, “From the second quarter, when sales to Rakuten Mobile are recognized, a full-scale earnings turnaround will be recorded.” He added, “Domestic 5G base station investment will also accelerate from the second quarter, contributing to sales.” In addition, as China is actively investing in 5G infrastructure, sales of MBF filters to ZTE are also expected to be fully recognized from the second quarter.

He continued, “Attention should also be paid to the fact that the United States and China will undertake large-scale infrastructure investments until next year.” He added, “Although the stock index has generally plummeted due to COVID-19, the company is expected to maintain an upward trend.”

This content was produced with the assistance of AI translation services.