[Click eStock] "BH, Higher Sales and Operating Profit Than Estimates... Increased Visibility"

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment stated on the 4th that BH's fourth-quarter sales and operating profit last year exceeded consensus estimates, maintaining a buy rating and a target price of 32,000 KRW.

BH achieved fourth-quarter sales of 402.1 billion KRW and operating profit of 43.4 billion KRW last year, which were 13% and 14% higher than estimates, respectively. Kim Rok-ho, a researcher at Hana Financial Investment, explained, "This is understood to be due to the strong performance of new models from North American clients and the earlier-than-expected preparation of next-generation products by domestic clients," adding, "Due to the withdrawal of competitors from the business, quarterly sales to domestic clients exceeded 70 billion KRW for the first time since 2015."

Hana Financial Investment projected BH's sales this year to increase by 22% year-on-year to 1.2642 trillion KRW, and operating profit to rise by 70% from last year to 120.7 billion KRW. They anticipated that market share expansion due to competitors' business withdrawal would lead to sales increases of 16% and 27% year-on-year for domestic and overseas clients, respectively.

Researcher Kim said, "Above all, the high visibility is positive," noting, "Operating profit in the first half of 2022 was 26.1 billion KRW, showing strong performance momentum compared to an operating loss of 16 billion KRW in the same period last year." He added, "Sales of electric vehicle battery cables are expected to significantly increase to 42.1 billion KRW from 27 billion KRW last year," and "Factory and equipment setup will be completed in the first half, enabling meaningful sales growth from the second half."

Furthermore, BH's price-to-earnings ratio (PER) based on this year is 7.9 times, indicating undervaluation. This is analyzed to be due to the fact that 86% of sales are from mobile display products and the risk posed by the entry of Chinese display panel companies. Researcher Kim noted, "However, it is necessary to keep in mind that sales proportions for 5G antenna cables, mobile, and electric vehicle batteries combined account for 13%," adding, "These components are areas with high growth potential and visibility, which is expected to contribute to valuation premiums."

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