Wisol, Korea’s only RF parts company
Stock price rose 45.41% in 6 months
Turned into surplus last year… “This year’s operating profit is 26 billion won.”Company “Enter into the PAMiD market in the second half of the year”
Sales expected to exceed KRW 200 billion within 2-3 years
“We are also strengthening our automotive RF parts sales capabilities.”Securities company’s highest target price is 11,000 won
Even if you bought it just 6 months ago, the rate of return is 50%.
It is 19 times the rate of return on one-year term deposits at commercial banks (based on 2.65% per year). ‘Ggeolmusae’ (a new word created by combining the words to do and a parrot that repeats words) is also an item to be regretted. This is the story of Wisol, ranked 343rd in KOSDAQ market capitalization (KRW 250 billion). The stock price on the 27th was 8,870 won, up 45.41% compared to 6 months ago (6,100 won on October 27, 2023). On the 25th, it hit a 52-week high of 9,130 won.
Wisol is Korea’s only RF (Radio Frequency) component company that develops, produces, and sells RF components necessary for mobile phone communication. It was established in September 2008 as a spin-off from Samsung Electro-Mechanics with SAW (Surface Acoustic Wave) Filter technology, which is the core of the business.
In order to operate properly, mobile phones must accommodate all communication methods, such as LTE and 5G, and use numerous frequency bands, including the transmitting and receiving frequencies required for various mobile phone functions. One mobile phone contains approximately 40 or more surface acoustic wave filters (SAW Filter, a component located under the antenna that enables reception of data, voice, etc. by selectively passing specific frequencies required for mobile phone communication received by the antenna using surface acoustic waves) A transmit/receive switch (Duplexer) is used, and Wisol supplies RF module products that combine various semiconductor devices and individual products such as SAW Filter/Duplexer, antenna switch, and Low Noise Amplifier (LNA) to domestic and foreign mobile phone manufacturers. It is its main business.
Korea’s only RF parts company… Transacted with Samsung Electronics, LG Electronics, etc.
Centered around the Korean corporation, the company has production corporations in Tianjin, China and Hanoi, Vietnam, and a research and development corporation in Japan. In Korea, RF chips are produced through product development through collaboration with a Japanese subsidiary and the fab process, which is a core process for producing SAW Filters and Duplexers. The Chinese and Vietnamese subsidiaries produce finished products using RF chips made in Korea through a modularization process that uses PCBs to package them or combine them with various semiconductor devices. Major customers are mobile phone manufacturers such as Samsung Electronics, Xiaomi, Oppo, and Vivo. Recently, it has entered the automotive RF parts market and supplies to LG Electronics and LG Innotek, and its competitors include Japan’s Murata and America’s Qualcomm.
Last year, it recorded sales of 369.7 billion won and operating profit of 13.5 billion won. We succeeded in turning a profit compared to the previous year. The proportion of customers is Samsung Electronics at 55%, Chinese mobile phone companies at 43%, and automotive customers such as LG Electronics at 2%. Daishin Securities expects sales of 431 billion won and operating profit of 26 billion won this year.
On the 27th, a Wisol official announced this year’s management strategy, saying, “We are carrying out two key tasks for mid- to long-term growth.” He said, “Through research over the past two years, we have developed a module product (PAMiD, filter + switch + power amplifier) containing PA. We will enter the PAMiD market in the second half of the year, and we expect sales of more than 200 billion won within 2 to 3 years. “He emphasized.
He also said, “We will strengthen our sales capabilities in the automotive RF parts market.” He said, “The TCU (Transmission Control Unit) of recently produced automobiles is equipped with RF components at the same level as mobile phones to perform communication,” and added, “The automotive RF component market is growing by an average of 15% per year due to the growth of electric vehicles and autonomous vehicles.” “It is expected to grow rapidly by around %,” he said. He added, “We have been collaborating with LG Electronics for about three years,” adding, “We expect sales of over 10 billion won in this field this year.” The key point to watch is whether the company will achieve sales of more than 50 billion won within two to three years in a market dominated by Qualcomm in the United States. Based on this business momentum, we aim to achieve sales of 700 billion won and operating profit of 70 billion won by 2027.
The total number of shares is 28,186,941, and the largest shareholder is Daedeok, which holds about 34% of the shares. National pension is 6.03%, treasury stock is 1.83%. Foreign ownership is 4.95%, and distribution volume exceeds 50%. As of the end of last year, it owned 133.6 billion won in cash assets, 11.2 billion won in land, and 39.9 billion won in buildings. This is over 70% of the market capitalization (KRW 250 billion).
It is a burden that Chinese companies continue to attack the RF parts market. They are competing through a low-price offensive based on the support of the Chinese government. However, due to intensifying competition, the Chinese government is reducing indiscriminate support, and due to low technology, there is a large deficit, so the industry believes that price competition will disappear within one to two years.
Stock prices with high targets… KB證 “11,000 won”
Due to expectations for good performance, five securities reports were published this year. Park Kang-ho, a researcher at Daishin Securities, said, “First quarter sales are estimated to be 108.4 billion won (13.1% increase compared to the previous year) and operating profit 7.2 billion won (93.3% increase).” He added, “Amid strong sales of Samsung Electronics’ Galaxy S24, sales of new products for HS filters have increased sales. “Profit margins will exceed estimates,” he predicted. Regarding the meaning of HS filter sales, he said, “Profitability has improved due to increased sales of filter modules, focusing on single products such as saw filters, and annual sales are expected to record more than 400 billion won for the first time this year.” He also expected this year’s operating profit margin to be 5-7% and suggested an increase in the proportion. The target stock price was raised from 7,600 won to 10,000 won.
Choi Seung-hwan, a researcher at Shinhan Investment & Securities, said, “Performance was sluggish between 2020 and 2022 due to intensifying competition and the coronavirus, but it turned into a surplus last year and growth is resuming with new products this year,” adding, “It is judged to be the beginning of a turnaround.”
Lee Chang-min, a researcher at KB Securities, said, “We adjusted the 10-year average ROE (return on equity) estimate upward by 1.1% compared to the previous one to reflect the improvement in cost structure through the decline and internalization of key materials and the improvement in operation rate due to the recovery of downstream demand (ROE 7.4%). →8.5%),” and suggested the highest target stock price of 11,000 won. There is a 24.01% upside potential compared to the current stock price.
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