Hana Securities: "Fine M-Tec’s North American orders are coming in earnest... Operating profit to rise 58% next year"

[Financial News]  Securities analysts say Fine M-Tec’s foldable-device business has entered a growth trajectory, with new North American customers joining the recovery of orders from domestic customers. In particular, North American orders are expected to offset the seasonal decline in orders from domestic customers, allowing revenue growth to continue even in the traditionally off-season fourth quarter.
On the 17th, Hana Securities estimated Fine M-Tec’s revenue this year at KRW 467.8 billion, up 95.6% from the previous year, and operating profit at KRW 40.3 billion, up 1,989.4%. However, it did not provide an investment rating or a target price.
Hana Securities judged that the improvement in performance had already begun in earnest. According to the firm, Fine M-Tec’s second-quarter revenue was KRW 95.2 billion and operating profit was KRW 7.3 billion, up 24.4% and 38.6%, respectively, from the same period a year earlier. The increase was attributed to the recovery of the company’s backplate supply share, which had declined last year as its domestic customer diversified its suppliers.
Hana Securities forecast third-quarter revenue of KRW 150.3 billion and operating profit of KRW 19.1 billion, driven by strong sales of new domestic foldable devices. These figures represent year-on-year increases of 161.2% and 1,140.5%, respectively.
Researcher Kwon Tae-woo said, "North America is the company’s new growth engine," adding, "Although mass production of new products was delayed due to delays in supplying outer hinges, the recent expansion of backplate supplies to North America has begun to translate the benefits of winning a new customer into actual results."
He added, "With the number of proven suppliers limited and competitors’ initial quality problems occurring at the same time, we understand that initial shipments have been concentrated at Fine M-Tec."
Hana Securities expects North American revenue in the second half of the year to exceed KRW 130 billion, with a substantial portion reflected in the fourth quarter. As a result, Fine M-Tec’s existing seasonal pattern is also expected to weaken. Even in the fourth quarter, when domestic foldable-device orders decline, new North American orders are expected to offset the decrease, lifting revenue to KRW 176.2 billion, up 17.2% from the previous quarter.
The key factor is stabilizing the yield of new North American models. Taking initial mass-production costs into account, fourth-quarter operating profit is forecast at KRW 16.1 billion. If production efficiency reaches the level of the company’s existing flagship products, profit estimates could be revised upward further.
Kwon said, "New North American orders will offset the seasonal decline in orders from domestic customers and support revenue growth even in the traditionally off-season fourth quarter," adding, "There is room for further upward revisions to profit estimates depending on how quickly the yield of the new models stabilizes." 
Meanwhile, Hana Securities forecast Fine M-Tec’s 2027 revenue and operating profit at KRW 660.4 billion and KRW 63.8 billion, respectively, when North American supplies are reflected for the full year. While the recovery in the domestic supply share drove the turnaround in performance this year, the expansion of North American customers is expected to become the central growth engine from next year.


[email protected] Kim Kyung-ah Reporter