Eugene Securities noted that while the performance of Genohco, a telecommunications corporation in the aerospace and defense sector, continues to decline, the acquisition by Korea Aerospace Industries (KAI) could lead to an increase in workload starting in the second half of this year (July to December).
Jeong Ui-hun, a researcher at Eugene Securities, said, "As of July 1st, the acquisition process by KAI has been completed, making Genohco the largest shareholder," adding, "Genohco has a greater possibility of securing aerospace-related components from KAI in the future."
Jeong's explanation is that, due to weak performance and new orders, Genohco's stock price has been on a downward trend, but the acquisition by KAI could yield significant results.
Genohco recorded sales of 14 billion won and an operating loss of 1.4 billion won in the second quarter of this year (April to June). While revenue grew compared to the same period last year thanks to growth in the satellite communications sector, operating losses continued. In particular, the order backlog at the end of June was 90 billion won, a slight decrease from 93.7 billion won at the end of March.
Jeong also noted that the increase in orders for power supply unit (PSU) business in the satellite communications institutional sector is significant. As the satellite equipped with the PSU supplied by Genohco has entered the flight model (FM) stage for verification, the effect of cost rate improvement could become evident as the year progresses.
Jeong did not provide a separate investment opinion or target stock price for Genohco. Nevertheless, he stated, "Expectations for a turnaround to operating profit due to expanded performance in the satellite business in the second half of the year and significant order potential related to aerospace from KAI's acquisition are being highly evaluated."