[Click eStock] "KMw Below 3Q Expectations... Continued Poor Performance"

Domestic and International 5G Infrastructure Investment Continues to Be Delayed
Concerns Over Poor Performance in 4Q... "Investment Expected to Resume After Next Year"

[Asia Economy Reporter Minwoo Lee] KMw has recorded a loss in the third quarter of this year, falling short of market expectations. Domestic and international 5G infrastructure investments are still delayed, and the downturn is expected to continue for the time being.

On the 15th, Eugene Investment & Securities decided not to provide an investment opinion or target price for KMw due to these circumstances. The closing price on the previous trading day was 37,750 KRW.

The third-quarter earnings announced on the 12th were weaker than expected. On a consolidated basis, sales were 36.2 billion KRW, and operating loss was 9.2 billion KRW, representing a 51.4% decrease in sales compared to the same period last year and a shift to an operating loss. These figures were significantly below market forecasts of 62.6 billion KRW in sales and 700 million KRW in operating profit.

Particularly concerning is that this poor performance has continued since the first quarter of this year. Sales of system products, which led growth in 2019, decreased by 86.5% compared to the same period last year. Antenna sales also dropped by 65.3% during the same period. Although filter sales increased by 22.5% during this period, it was not enough to drive overall sales growth. Researcher Jongseon Park of Eugene Investment & Securities explained, "Domestic telecom companies and overseas 5G infrastructure investments have been delayed through the first half and into the third quarter of this year, causing continued poor performance. Operating profit turned negative compared to the same period last year and the previous quarter due to a significant drop in sales and the impact of fixed costs."

Poor performance is expected to continue into the fourth quarter. Eugene Investment & Securities forecasts that KMw will record consolidated sales of 72.7 billion KRW and an operating profit of 400 million KRW in the fourth quarter. Sales are expected to slightly increase compared to the same period last year, with operating profit expected to be around the breakeven point. Due to the ongoing COVID-19 situation, domestic and international 5G investments are delayed, and related sales are expected to remain sluggish.

Researcher Park added, "However, as vaccine distribution is actively progressing worldwide, investments are expected to resume by the end of this year and next year. KMw is continuously pursuing diversification of domestic and overseas customers based on various products such as systems, antennas, and filters, so if investments resume, performance is expected to grow significantly."

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