Korea Stock Market Insights

Tag: FPCB

  • EV Advanced Materials: H1 2025 Earnings Shock – What Investors Need to Know

    1. EV Advanced Materials: H1 2025 Earnings Shock

    EV Advanced Materials’ H1 2025 revenue decreased by 19% year-over-year, and the company swung to an operating loss. The net loss also widened. Declining sales in the FPCB segment and losses from investments in associated companies are identified as the main causes.

    2. Analyzing the Causes of Underperformance

    2.1 FPCB Business Slump: The decline in revenue from the core FPCB business is attributed to slowing demand in downstream industries and intensifying competition. The slowdown in the smartphone market seems to have particularly impacted FPCB demand.

    2.2 Losses from Investments in Associated Companies: Losses from investments in associated companies also contributed to the poor performance. This is a result of a combination of factors, including underperformance of the invested companies and worsening market conditions.

    2.3 Increasing Financial Burden: Issuing convertible bonds and other financing activities have increased debt levels, leading to a higher debt-to-equity ratio. This raises concerns about financial stability and could put pressure on future funding and operations.

    3. Investment Strategy Implications

    3.1 Short-Term Investment Strategy: The earnings shock and increasing financial burden are expected to put downward pressure on the stock price in the short term. A conservative investment approach is recommended, and investors should closely monitor the progress of the rights offering and its potential for stock dilution.

    3.2 Mid-to-Long-Term Investment Strategy: The growth potential of the FPCB business driven by the expanding EV market, investments in new businesses, and technological development efforts are positive factors. For investors considering a mid-to-long-term investment, it’s crucial to monitor improvements in profitability, restoration of financial health, and tangible results from new businesses. Attention should also be paid to strategies for dealing with intensifying competition and changes in the macroeconomic environment.

    What are the main reasons for EV Advanced Materials’ poor performance in H1 2025?

    The main reasons are the slump in the FPCB business and losses from investments in associated companies. A combination of factors contributed, including intensifying competition in the FPCB market, slowing demand in downstream industries, and poor performance of the invested companies.

    What is the outlook for EV Advanced Materials’ stock price?

    In the short term, the poor earnings and increasing financial burden are expected to put downward pressure on the stock price. In the mid-to-long term, there is growth potential due to the expanding EV market, but it’s essential to monitor improvements in profitability and financial health.

    What should investors consider when investing in EV Advanced Materials?

    Short-term investors should take a conservative approach and monitor the rights offering and its potential for stock dilution. Mid-to-long-term investors should monitor profitability improvements, financial health restoration, and new business performance, while paying attention to competition and macroeconomic changes.

  • Newflex (085670) Q2 2025 Earnings Analysis: Return to Profitability, But Revenue Decline Continues

    1. Newflex Q2 2025 Earnings: What Happened?

    Newflex reported revenue of KRW 39.9 billion (down 3.9% YoY), operating profit of KRW 3.2 billion (down 22% YoY), and net income of KRW 1 billion (return to profitability) in Q2 2025. While revenue fell short of market expectations, operating profit exceeded estimates, leading to a return to profitability.

    2. Behind the Return to Profitability: Why the Turnaround?

    Despite the decline in revenue, Newflex’s efforts to improve profitability paid off. Cost reductions and enhanced expense management boosted operating profit. However, profitability remains lower compared to the same period last year.

    3. Key Investment Considerations: What Does This Mean for Investors?

    • Intensifying FPCB Market Competition: Competition from Chinese and Southeast Asian companies is putting pressure on Newflex.
    • New Business Growth Potential: New ventures in EV batteries and automotive components could provide long-term growth momentum.
    • Foreign Exchange Risk: Fluctuations in the KRW/USD exchange rate could impact profitability.
    • Financial Health: The net loss on a standalone basis raises concerns.

    4. Investor Action Plan: What Should You Do?

    Investors should consider future earnings trends, new business performance, and macroeconomic conditions when making investment decisions. Pay close attention to Newflex’s performance in the EV-related FPCB market and the sustainability of its profitability improvements.

    What is Newflex’s main business?

    Newflex manufactures and sells Flexible Printed Circuit Boards (FPCBs). These are essential components in various products, including smartphones, automotive electronics, and wearable devices.

    How did Newflex perform in Q2 2025?

    Newflex reported revenue of KRW 39.9 billion, operating profit of KRW 3.2 billion, and net income of KRW 1 billion. While revenue missed market expectations, operating profit exceeded estimates, resulting in a return to profitability.

    What are the key risks to consider when investing in Newflex?

    Investors should be aware of the intensifying competition in the FPCB market, foreign exchange risk, and the company’s financial health, particularly the net loss on a standalone basis.

  • Interflex (051370) Q2 2025 Earnings Analysis: Unexpected Loss, What’s Next?

    1. Interflex (051370) Q2 2025 Earnings: What Happened?

    Interflex announced its Q2 2025 earnings on August 14th, reporting KRW 85.7 billion in revenue (-22% YoY), KRW 1.7 billion in operating profit (beating estimates but significantly down YoY), and a net loss of KRW 0.1 billion. The disappointing results, falling far short of market expectations, have raised concerns among investors.

    2. Why These Results?

    • • Global economic slowdown, maturing smartphone market, and intensified competition in the FPCB industry.
    • • Deteriorating cost structure due to rising raw material prices and increasing operating expenses.
    • • Increased fixed cost burden and reduced production efficiency due to low utilization rates at the parent company’s smart center.

    3. What’s Next?

    In the short term, downward pressure on the stock price due to poor performance is likely to persist. However, Interflex holds over KRW 100 billion in cash and cash equivalents, mitigating short-term financial risks.

    In the mid-to-long term, Interflex is seeking growth drivers through the acquisition of KOREA CIRCUIT VINA CO., LTD and expansion into new businesses. The future of Interflex hinges on the recovery of the FPCB market, demand changes from key customers, and the success of these new ventures.

    4. Investor Action Plan

    Investors should closely monitor Interflex’s future earnings improvements, tangible results from new businesses, and cost optimization efforts. A long-term perspective, focusing on the company’s business restructuring and profitability improvement efforts, is crucial rather than reacting to short-term stock price fluctuations.

    Frequently Asked Questions

    How did Interflex perform in Q2 2025?

    Interflex reported KRW 85.7 billion in revenue (-22% YoY), KRW 1.7 billion in operating profit (down YoY), and a net loss of KRW 0.1 billion.

    What are the reasons for the poor performance?

    A combination of factors contributed, including the global economic slowdown, maturing smartphone market, increased competition, rising raw material prices, higher operating expenses, and low utilization rates.

    What is the outlook for Interflex?

    While downward pressure on the stock price is expected in the short term, the company’s new business ventures offer mid-to-long-term growth potential. A turnaround is possible depending on market conditions and the company’s efforts.

  • BH (090460) Q3 2025 Earnings Analysis: Net Loss and Investment Strategy

    1. What Happened? Q3 Earnings Summary

    BH reported Q3 2025 revenue of KRW 389.7 billion (vs. estimated KRW 405.1 billion, -4%), operating profit of KRW 16 billion (vs. estimated KRW 13.1 billion, +22%), and a net loss (vs. estimated KRW 10.3 billion profit). While operating profit exceeded expectations, the net loss is a negative signal for the market.

    2. Why These Results? Analyzing the Underperformance

    The primary driver of the net loss is the underperformance of the FPCB division. Rising raw material costs and low production capacity utilization negatively impacted profitability. High dependence on Samsung Display also poses a risk. The automotive electronics division performed relatively better, but sales still declined year-on-year.

    • External Factors: Rising raw material prices, unfavorable exchange rates, interest rate hikes, and the global economic slowdown also contributed to the negative performance.

    3. What Now? Investment Strategy Recommendations

    The outlook for BH remains uncertain. Key factors to monitor include the FPCB division’s ability to improve competitiveness and diversify its customer base, the growth trajectory of the automotive electronics division, and the evolving macroeconomic environment. We recommend the following investment strategy:

    • Risk Management: Construct a portfolio that accounts for the elevated financial risks.
    • Monitoring: Continuously monitor raw material prices, exchange rates, interest rates, and global economic conditions.
    • Information Gathering: Review the detailed Q3 report and assess future management plans.

    Currently, a ‘wait-and-see’ approach or a strategy focused on ‘risk management’ is more appropriate than outright ‘buy’.

    Q: What’s the key takeaway from BH’s Q3 earnings?

    A: While operating profit beat estimates, the shift to a net loss is the key concern, primarily driven by the struggles of the FPCB division.

    Q: Is it a good time to invest in BH?

    A: A cautious approach focusing on ‘wait-and-see’ or ‘risk management’ is recommended given the uncertain outlook.

    Q: What’s the outlook for BH?

    A: The outlook is uncertain and depends on various factors like the FPCB division’s competitiveness, customer diversification, the growth of the automotive electronics division, and macroeconomic conditions.