[Click eStock] "EMTEK, Focus on Growth of Electronic Cigarette Market"

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 65,000 KRW on Emtek on the 20th, citing differentiated growth potential within the market due to the high growth of the electronic cigarette market and the expansion of its client base.

In the first quarter, the company posted sales of 131.5 billion KRW and operating profit of 14.2 billion KRW, representing growth of 27.5% and 40.1% respectively compared to the same period last year. Components accounted for 64.2 billion KRW and products for 67.3 billion KRW, expected to have grown 30.4% and 24.9% respectively year-over-year.

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The components division is expected to grow alongside all business units due to its main supply of parts for key products of client companies and strong sales of electronic cigarettes. The new healthcare business is expected to reflect some sales only after March, with quarterly growth anticipated from the second quarter onward. Looking at the flow of electronic cigarette imports from Vietnam to Korea, the provisional volume from April 1 to 10 is estimated to exceed the entire volume of March by 50%. Researcher Han Kyung-rae of Daishin Securities analyzed, “If this trend continues, April is expected to show high growth of over 70% compared to the previous month.”

The Swedish company Nolato, an existing vendor for BAT’s electronic cigarette Glo, is estimated to have recorded electronic cigarette sales in the mid-400 billion KRW range last year. Considering BAT’s Glo lineup, this is judged to be sales generated from a single model. Meanwhile, Emtek prioritized production of BAT’s less popular model, Glo Pro Slim, in the second half of last year. Researcher Han Kyung-rae stated, “Despite being a less popular model, it is receiving a good response in Japan, leading to an upward revision of target sales,” and added, “There is a high possibility of additional orders for BAT’s main models in the future, so if the model lineup expands, sales exceeding those of Nolato can be expected.”

Medikube AGR, a major client in healthcare, is showing strong sales momentum. It ranked first in sales in the beauty device category on Japan’s Rakuten in April. It is estimated that interest in beauty devices is expanding due to the full-scale export to the US and Japan in the second half of this year, followed by Europe, and the reopening demand.

Total sales for this year are projected to reach 604.9 billion KRW, with operating profit of 69.7 billion KRW, representing growth of 51.1% and 87.8% respectively compared to the previous year. In 2023, with the expansion of electronic cigarette and healthcare lineups, sales are expected to comfortably exceed 900 billion KRW.

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