[Click eStock] "Interplex, Sales and Operating Profit Turnaround Expected Next Year"

Daishin Securities Report
Next Year's Sales 507 Billion Won... 51% Increase

[Asia Economy Reporter Minji Lee] Daishin Securities on the 30th upgraded its investment opinion on Interflex to "Buy" and set a target price of 22,000 KRW. This is based on the judgment that sales and operating profit will show a turnaround next year.

Interflex's total sales next year are estimated to reach 507 billion KRW, a 51% increase compared to this year. Operating profit is expected to turn positive at 21.1 billion KRW for the first time in three years. Kangho Park, a researcher at Daishin Securities, said, "Starting from the first quarter of next year, we will enter a full-scale performance improvement phase," adding, "The expansion of models applying flexible PCB (digitizer - converting pen tool movements in IT devices into digital signals) and the possibility of additional expansion of clients next year have increased."

The pen function applied to Samsung Electronics' Galaxy Note is expected to expand to the Galaxy S21 (Ultra) and Galaxy Z Fold3 (foldable phone) next year. Even considering the discontinuation and sales reduction of the Galaxy Note model, the absolute sales volume of the Galaxy S series is higher than that of the Note, and including foldable phones with larger screens, the quantity and price of Interflex's digitizers are expected to increase significantly next year.

Researcher Kangho Park explained, "As digitizer sales, which were concentrated in the third quarter in the past, are dispersed quarterly, the burden of fixed costs will be alleviated, and operating profit in the first quarter of next year will turn positive," adding, "The pen function is Samsung Electronics' differentiation strategy, so the average supply price of Interflex, the main supplier, will rise."

It is also positive that there is a high possibility of supplying display-oriented R/F PCB to global smartphone companies next year. If domestic suppliers discontinue the R/F PCB business, Interflex is expected to take over the supply position and reflect it in sales from the second half of next year. Currently, the R/F PCB industry is refraining from further capacity expansion, and considering Interflex's low operating rate, it is judged to be a new supply alternative compared to competitors.

Researcher Park said, "If R/F PCB is supplied to global smartphone companies in the second half of next year, it will also be possible to supply R/F PCB for other IT devices in 2022," adding, "Sales in 2022 (621 billion KRW) are estimated to increase by 20.6% compared to the previous year. Although there was a period of decline and slowdown after 2017 sales (805.5 billion KRW), sales will increase again next year."

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