Partron _091700 KQ_
Samsung i9100 is Samsung's first dual-core mobile phone. Samsung i9100 the body size of 125.3 � 66.1 � 8.5mm, weighs only 116g, light on its predecessor Galaxy S. Not only that, it is also equipped with a viewing area up to 4.3-inch screen, while the 8.49mm Samsung i9100 body. May 2011, Samsung I9100 officially listed.
June 13, 2011 Partron (091700 KQ) Telecom equipment/ Electronic components Buy Wonjae Park +822-768-3372 email@example.com Young Ryu +822-768-4138 firstname.lastname@example.org 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.