[Click eStock] "Samhwa Electric, Capacitor Market Boom... Continued Performance Improvement in Second Half"

[Asia Economy Reporter Ji-hwan Park] Hana Financial Investment on the 30th predicted that Samhwa Electric will continue its performance improvement trend due to better-than-ever market conditions.

Jae-ho Choi, a researcher at Hana Financial Investment, stated, "The company is benefiting from a surge in demand for home appliances, which accounts for a large portion of sales, and performance growth is expected to continue for the time being due to the spread of the Delta variant." Samhwa Electric was established in 1973 and is engaged in the manufacturing and sales of various electrolytic capacitors. Capacitors are key components of electronic devices because, in addition to storing electricity, they are used to block or allow the flow of current.

Researcher Choi explained, "In the past, electrolytic capacitors were mainly focused on home appliances and industrial use, but recently, with the increase in IT devices, their application areas have expanded to 5G repeaters, automotive electronics, and renewable energy, which require high temperature, high capacity, and long lifespan." He added, "Structural benefits are expected due to the expansion of Samhwa Electric's front-end industries." As of last year, the sales composition by application was 73% home appliances, 18% industrial, 6% automotive electronics, 2% 4th industry, and 1% eco-friendly.

Although the current market conditions are favorable, the expansion of new application areas is considered a key point. Researcher Choi said, "The growth will be driven by the expansion of new application areas such as 5G, Cloud, the 4th industry, and automotive electronics." He introduced, "The S-CAP, jointly developed with Samsung Electronics, is an electrolytic capacitor developed for SSDs and serves as a domestic substitute for capacitors previously supplied by Japanese companies."

He added, "Since May, supply has been ongoing for one model, and quality tests for two additional models are currently underway."

Sales of electrolytic capacitors for SSDs are expected to exceed 11 billion KRW this year. The mix effect of high value-added products is expected to significantly improve overall profitability. The operating profit ratio of SSD-related sales is expected to expand to the 20% range this year.

This year, sales are expected to reach 243.4 billion KRW and operating profit 22.8 billion KRW, representing increases of 22.1% and 290.4% respectively compared to the previous year. He stated, "The company is benefiting from a surge in home appliance demand and is receiving a secondary benefit from the bankruptcy of many Chinese electrolytic capacitor companies due to COVID-19." He also noted, "Growth in new application areas is remarkable; sales of electrolytic capacitors for automotive electronics in the first half of the year grew by more than 50% compared to the same period last year." He added that with the expected acquisition of additional SSD customers, the operating profit margin (OPM), which was only in the single digits, has laid the groundwork to level up to over 10% in 2022.

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