Partron _091700 KQ_

							                                                                                                                                                                       June 13, 2011




Partron (091700 KQ)                                                                                                                                 Telecom equipment/
                                                                                                                                                 Electronic components


Buy                                                                                    Wonjae Park              +822-768-3372 william.park@dwsec.com
                                                                                       Young Ryu                +822-768-4138 young.ryu@dwsec.com
TP: W27,000/MktCap: W322bn



Sales likely to hit a historic high in 2Q; Could pass the W100bn mark in 3Q
 Maintain Buy call with TP of W27,000 (vs. current share price of W16,100)
We reiterate our Buy call on Partron with a target price of W27,000. Our target price corresponds to a 2011F P/E of 16x
(EPS of W1,681) and a 2012F P/E of 12.2x (EPS of W2,207). Our valuation does not appear low for a parts maker, but we
believe that PartronÊs shares deserve a premium in light of: 1) the companyÊs potential for becoming a comprehensive
parts provider, 2) its possible overseas expansion, 3) the expected success of its new businesses, and 4) projections for
record-high 2Q earnings on the back of the success of the Galaxy S2. Indeed, PartronÊs strong 2Q results should stand
out, given that IT companies are performing poorly as a whole in 2Q.

 Momentum to come from parts for the Galaxy S2 and Galaxy Tab; Sales to set records in 2Q and 3Q
We project PartronÊs 2Q sales and operating profit to reach W76.4bn (up 43.8% YoY) and W9.5bn (up 13.7% YoY),
respectively. This sales result would mark the first time that the companyÊs quarterly sales exceeded the W70bn mark.
We attribute these strong sales to a surge in sales volume for the Galaxy S2 (PartronÊs top customerÊs key smartphone).
Partron is supplying camera modules (2 megapixels), DMB antennas, and GPS antennas for use in the Galaxy S2.
Considering that the sales contribution of Galaxy S2-use parts just started expanding in end-April, PartronÊs sales may be
able to surpass the W100bn threshold for the first time in 3Q.
Furthermore, Partron is expected to see positive effects from its top customerÊs solid tablet PC sales, as the company is
supplying or is likely to supply parts for use in the Galaxy Tab 10.1, 8.9, and 7.3 models. PartronÊs top-line growth
momentum will likely remain solid in 2H11.

 OP margin to stabilize at 12%; Now is the time to enjoy growth
Partron has displayed brisk growth alongside the growth of the handset market. The companyÊs profitability also
remained high until 4Q10 with an OP margin of around 15% on the back of its mass production technology. However,
Partron is currently experiencing growing pains due to its heavy dependence on certain customers, the slow growth of
its new businesses, and the sluggish performances of its subsidiaries. As a result, the companyÊs OP margin deteriorated
to the single-digit level in 1Q for the first time since its listing and is forecast to fall 3.2%p YoY to 12.4% in 2Q. In light of
an increasing proportion of low-margin camera module sales (in the companyÊs total sales), and potential downward
pricing pressure from its top customer, we do not expect Partron to post an OP margin of over 15% going forward.
Nevertheless, the companyÊs OP margin is forecast to stabilize at roughly 12%, driven by the expected sales volume
growth at its top customer and customer base diversification. Indeed, now is the time to enjoy PartronÊs growth.




 § Earnings & Valuation Metrics
FY              Sales          OP       OP Margin          NP                                EPS          EBITDA               FCF          ROE            P/E          P/B        EV/EBITDA
               (Wbn)        (Wbn)             (%)        (Wbn)                                (W)          (Wbn)             (Wbn)           (%)            (x)          (x)               (x)
12/09            192           33            17.3          24                               1,206             37                16          30.2          11.2          3.0               7.0
12/10            233           36            15.6          24                               1,183             39                  6         22.9          18.5          3.8              11.1
12/11F           341           43            12.6          34                               1,681             46                 -8         24.9           9.6          2.1               7.7
12/12F           441           56            12.7          44                               2,207             60                21          25.5           7.3          1.7               6.3
12/13F           503           64            12.8          51                               2,549             70                25          23.7           6.3          1.4               5.7
Source: Company data, Daewoo Securities Research estimates

This document is a summary of a report prepared by Daewoo Securities Co., Ltd. („Daewoo‰) and published on our website. Please review the compliance notices contained in the original
report. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified.
Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information and opinions contained in this document.
Daewoo accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and
opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to
purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed or published in whole or in part for any purpose.