1. What Happened at Neontech?

Neontech’s H1 2025 revenue plummeted by 69.8% year-over-year to 31.5 billion KRW. The main culprit was sluggish exports of its core ‘Saw & Sorter’ and ‘Assembly Line’ equipment. Operating income showed a loss of 2.2 billion KRW, with net income also in the red.

2. Why Did This Happen?

Neontech’s declining performance is a result of both external factors, such as the global economic slowdown and reduced investment from key clients, and internal factors, including weakening competitiveness in its core business. Its high reliance on sales to Company A (41.5%) and Company B (25.8%) poses a significant risk. The poor performance of its subsidiary, GIS, also contributed to the decline.

3. What’s the Outlook?

Neontech is pursuing new ventures in smart farms, smart aquaculture, and AI software development, but tangible results are yet to be seen. The recovery of its core business is crucial for its future. While the rise in the USD/KRW exchange rate could be a positive factor, it’s unlikely to have a significant impact if export sluggishness persists. Potential interest rate hikes and declining global shipping volumes also pose downside risks. Although Q2 operating and net income improved slightly, it remains to be seen if this marks a sustained turnaround.

4. What Should Investors Do?

Analysts recommend a ‘Hold’ rating for Neontech. Investors should maintain a cautious approach until positive changes, such as a recovery in core business performance, stabilization of financial structure, and tangible results from new ventures, are observed. Closely monitoring future earnings announcements and business developments is crucial for making informed investment decisions.