Investment points and conclusions - The company has the nation's top technology

[Hyundai Motor Securities Small Cap / Bangsan Kwak Min Jeong]
UTI (179900)
BUY/60,000 won (new)
<Chosun's No.4 hitter>

■ Investment points and conclusions
- The company has the nation's top technology in its main business, tempered glass processing, and its main products are camera window cover glasses for smartphones, accounting for 97.4% of total sales as of 2023, but is expected to secure new growth momentum as new businesses UTG and UFG development are completed
- Until now, the display industry has focused on making UTG thin, and the UTG applied to mass production has a thickness of 30㎛. The thinner the implementation, the weaker the strength, the more difficult it is to make a large area, and the lower the reliability, the higher the production cost. Recently, a method of implementing curvature while maintaining a thick UTG thickness has been attempted to optimize scratch resistance. Currently, foldable display cover windows require high technology due to durability and wrinkle problems, and the UFG adoption rate will increase in line with the increasing trend. The company has met the performance exceeding the folding limit evaluation 200,000 times through UFG products, which are UTG products that exceed 100㎛

■ Major issues and earnings outlook
- According to media reports, a global IT company is known to release foldable devices from 2026 to 2027 in the foldable market where existing Samsung Electronics and Huawei share 80% of the market. According to United Daily News, the company sets a sales target of 50 million units for the first year of the project, which is expected to be released from 2026 to 2027, but if the company conservatively estimates it to be 25% of about 47 million units based on Flagship, the initial target will be about 11 million units. BOE, TSL CSOT, and Visionox are also developing foldable devices that apply UTG, and there is a high possibility of market growth in the future. As a result, the company's participation in the foldable market is likely to lead to high growth in performance from 2025. In particular, the company is the only company in the world that can remove wrinkles through polymer technology that fills thin areas, so if a new foldable product is released, the company's UFG is likely to be adopted and is expected to serve as a big earnings momentum
- According to market researchers, global foldable phone shipments are expected to increase by 29% year-on-year to 26.5 million units in 2024 and 100 million units in 2027. Due to the full-fledged launch of foldable phones by Chinese companies such as Huawei and Vivo, the shipment of foldable phones in the Chinese smartphone market in 2023 increased by 114.5% year-on-year to about 7 million units. In this situation, smartphone manufacturers must ultimately target the foldable phone market in order to create premium elements, and the global foldable market is expected to grow faster with the launch of foldable devices by global IT companies

■ Stock price outlook and valuation
- The company's 2024 earnings are expected to reduce its deficit year-on-year to KRW 20 billion (+5.0% yoy) in sales and KRW 14.6 billion in operating profit
- Investment opinion 'Buy' and target price KRW 60,000 for the company. Target P/E 36x is calculated on average EPS for 2026 and 2027, when growth is in full swing

*URL: https://url.kr/2eahdr

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