[Click eStock] Cowintech, Possessing Secondary Battery Equipment Technology "Promising Earnings Improvement"

[Asia Economy Reporter Lee Seon-ae] Hanyang Securities evaluated on the 18th that Kowintech is expected to generate stable profits due to its technological competitiveness from early entry into the secondary battery automation equipment market. However, no investment opinion or target price was presented.

Kowintech is a specialized company in automation equipment for smart factories, supplying secondary battery process automation systems (equipment + IT systems). It is estimated to possess technological competitiveness from early entry into the secondary battery automation equipment market, and its experience in automation systems and delivery references to secondary battery clients demonstrate its competitiveness. The company continuously enhances control technology through improvements in related technologies such as precision, strengthening its competitiveness. Based on this, it collaborates from the factory design stage of secondary battery manufacturers to build customized automation systems for each client.

The front-end industry environment, including increased investment by secondary battery manufacturers and issues related to reducing manufacturing costs of secondary batteries, is favorable for the company. In particular, compared to the increasingly competitive post-process automation system market, the front-end process is in the early market stage, and its adoption is expected to continue expanding. The required technology level is higher than that of the post-process, resulting in lower competition intensity and higher profit margins. Kowintech already holds delivery references for front-end automation systems to major companies.

Researcher Kim Yong-ho of Hanyang Securities stated, "The front-end automation system is a segment where the sales proportion is continuously expanding, and it is expected to drive Kowintech’s top-line and profit growth going forward." He added, "Additionally, Kowintech continues efforts to diversify its customer base and is expected to strengthen its global sales capabilities through customer references held by Top Material."

Meanwhile, performance improvement is expected from the second half of the year. Although performance was sluggish last year due to delayed front-end industry investments caused by the COVID-19 impact, order backlogs have been increasing again since the second half of last year, and performance improvement is expected this year. In the second quarter, sales reached 28.6 billion KRW (YoY +291.4%) and operating profit was 700 million KRW (YoY +352.7%). The operating profit margin (OPM) was 2.4%, showing YoY improvement but a QoQ decrease of 9.1 percentage points, mainly due to the reflection of bonuses and retirement allowances. However, large orders are expected in the second half, and if orders materialize, consolidated sales for this year are expected to exceed 120 billion KRW, with OPM slightly surpassing 10%. Currently, the stock price has not recovered to pre-COVID-19 levels, but visible performance improvement could act as a catalyst for stock price recovery.

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