[Click eStock] "Ilantec, Expected Sales Growth in E-Cigarette and Secondary Battery Pack Businesses"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment on the 21st issued a buy rating and a target price of 26,700 KRW for I-Lan Tech, based on the judgment that both the electronic cigarette sector and the secondary battery pack business will proceed smoothly.

I-Lan Tech signed an electronic cigarette supply contract worth approximately 370 billion KRW on the 14th. Although the supply period extends until June next year, considering the paradigm shift from the tobacco industry to electronic cigarettes and the client company's aggressive export expansion policy, it is expected that more than 90% of the order amount will be supplied within this year.

Researcher Kyusang Kim of Hana Financial Investment explained, “The client company will aggressively expand exports mainly with the Lil Solid 2.0. Considering that exports to countries with high smoking rates such as Italy and Russia have just begun, sales of electronic cigarette devices will grow steeply.” According to Hana Financial Investment’s sales estimates for the electronic cigarette sector, sales are expected to grow from 108.3 billion KRW last year to 332.4 billion KRW this year and 672.4 billion KRW next year.

I-Lan Tech is expected to generate an additional approximately 70 billion KRW in sales not only from electronic cigarettes but also from the home ESS battery pack business. The company plans to sell to North America and Europe in cooperation with major domestic electric and electronic companies and has installed a dedicated mass production line at its Dongtan Plant 2. The company analyzed, “Sales of battery packs for India’s e-Scooters will also increase sharply within a few years. Considering that electronic cigarettes and battery packs will account for most of the total sales, I-Lan Tech’s market capitalization is significantly low.”

The target price was calculated by applying a target PER (price-to-earnings ratio) of 16.3 times to the expected EPS of 1,635 KRW in 2022. The target PER was derived by applying a 30% discount to the average PER of 23.3 times during 2017?2017 when EM Tech, a company related to electronic cigarettes, began full-scale electronic cigarette sales. Researcher Kyusang Kim said, “The proportion of electronic cigarettes in I-Lan Tech’s expected sales this year is about 30%, which is lower than EM Tech’s electronic cigarette proportion of 40% in 2018. The competitor’s electronic cigarette sales this year are about 270 billion KRW, while I-Lan Tech secured orders worth about 370 billion KRW. In addition, since the battery pack business is maintained, there is no need to significantly lower the corporate value.”

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