Hyundai Telecommunication Co. Ltd (039010.KQ) is specialized in the manufacturing of home network and automation systems, intelligent lighting and security systems. Its products range from kitchen televisions, digital door locks to security lightings and CCTV systems.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] Hyundai Telecommunication has offices in Korea, Japan, and Kazakhstan and distributes its products within the domestic market and overseas, including China, India, Canada, the US, and Russia. The company has received various brand and design awards, including the worldwide recognized German IF Design Award, and holds currently five patents for its LED lighting trademark ‘WEET’ as well as four design patents. The management is ambitious to develop Hyundai Telecommunication into the number one company for smart home and smart lighting systems.
Hyundai Telecommunication was founded in 1998 as a spin-off from Hyundai Electronics’ home automation business and is headquartered in Seoul, South Korea. The shares are listed on South Korea’s stock exchange since 2000. Major shareholders are the CEO and the chairman, Mr. Gun-Koo Lee and Mr. Nae-Heun Lee, with an ownership of together 38 percent. Around 62 percent of the shares are in public hand.
With a workforce of 126 employees, Hyundai Telecommunication reported revenues of 82bn KRW (77m USD) and profits before tax of 13bn KRW (12m USD) over the first nine months of 2017. This is an increase of 32 percent and 62 percent respectively compared to the same period a year ago. In 2016, revenues and profits were up 12 percent and 30 percent respectively. The operating margin of 15 percent is slightly below industry average and has room for improvements. Hyundai Telecommunication had cash reserves of 12bn KRW (11m USD) at the end of September 2017. The company shows a healthy balance sheet with good profitability and financial strength. The equity ratio is at 57 percent and the gearing, defined here as total liabilities to total equity, at 75 percent. The company has no debts.
Hyundai Telecommunication’s shares are in an uptrend since last November and gained 43 percent in value since, 28 percent alone this year. The company is priced at eight times earnings. The shares trade roughly at twice the book value and at six times cash flow. The latest dividend yielded 1.6 percent.
We like the company’s healthy financial position with a good profitability and financial strength. The valuation is still reasonable. The outlook for the smart home industry is positive with an expected growth rate of around 15 percent annually over the next five years. Hyundai Telecommunication’s revenues and profits grew by around 18 and 122 percent annually over the last four years. Assuming a stable global economic development, we expect the share price to increase by at least 20 percent until the end of this year.
AIS Rating: ★★★★☆
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 Q1-3 ONly |
|
|---|---|---|---|---|---|---|
| EPS (KRW) | -8 | -16 | 645 | 1,018 | 1,220 | 1,221 |
| Change | 99% | -100% | 4131% | 58% | 20% | 40% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | LIAB./ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 8 | 14 | 1.9 | 6 | 57% | 28% | 75% | 1.6% |
* Equity / Total Assets, ** Total Liabilities / Equity
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