Kiwoom Securities on the 31st said that, unlike the safety institutional sector, weakness in automation orders is continuing at Wooshin System. It lowered its target price to 9,500 won from 11,500 won while maintaining a "buy" rating. Wooshin System's previous trading day closing price was 5,710 won.
Wooshin System's revenue and operating profit last year were 388.6 billion won and 20.8 billion won. They plunged 82% and 75%, respectively, from a year earlier. This was because revenue in the automation institutional sector fell 40% as legacy battery institutional sector automation orders slumped. The safety (seat belt) business continued to show growth.
Kim Hak-jun of Kiwoom Securities said, "As the seat belt institutional sector turned to profit, it cushioned the weakness in automation equipment," and added, "If results improve going forward, conditions are in place for profit leverage to emerge."
The safety institutional sector is also expected to increase revenue this year. Of the estimated 284.8 billion won in auto parts revenue, seat belts account for about 84%. Kim said, "Compared with last year, as new models from Stellantis, GM and Ford are mass-produced, full-fledged revenue growth will materialize."
By contrast, the automation institutional sector has results supported by recognition of Europe-bound sales through the first quarter, but from the second quarter the fallout from sluggish orders could surface. Kim said, "As orders slated for the first quarter were delayed, improvements in body equipment and battery automation results will be reflected in the third to fourth quarters this year."
He added, "We further scaled down the portion related to existing automation lines, but revenue tied to safety is being maintained, so stable earnings growth should be possible."