20150528-三星证券-Partial_to_Woory_Industrial_16页_565kb

Sector Update Summary

Core Content

This document provides an update on the Korean auto parts sector, focusing on two companies: S&T Motiv and Woory Industrial. The analysis highlights the performance of these firms, their market positions, financial metrics, and future outlooks.

Key Companies and Their Status

• S&T Motiv (064960 KS, KRW65,100):

  • Current price: KRW68,000 (+4.5%)
  • Target price: Not specified
  • Holding: The firm is a niche market player in automotive motors, with a strong share price performance (139% ytd)
  • The company benefits from economies of scale and the rising use of electronics in cars.

• Korea Electric Terminal (KET):

  • Current price: KRW15,700
  • Not rated
  • The firm is a second-tier vendor in automotive connectors, with a strong ytd performance (110%)
  • It also benefits from the trend of outsourcing and rising electronics usage in vehicles.

• Woory Industrial (215360 KS, KRW15,700):

  • Not rated
  • Current price: KRW15,700
  • Market cap: KRW143.4b/USD130.8m
  • The firm is a niche market player in HVAC actuators and other climate control components, with a strong position in the global market.

Main Points

S&T Motiv and KET: Strong Performance and Market Position

• S&T Motiv and KET are both second-tier vendors in the auto parts sector.
• They operate in niche markets that are difficult for large firms to penetrate.
• Both benefit from economies of scale and competitive pricing, which allows them to gain from outsourcing by global auto manufacturers.
• The increasing use of electronics in cars is a key driver for both companies, as it increases the applicability and value of their products.
• S&T Motiv has a target price and is currently rated HOLD.

Woory Industrial: Niche Market Leader with Growth Prospects

• Woory Industrial is a key player in the HVAC actuator market, with a 23% market share expected in 2015.
• The company is gaining global market share due to its competitive pricing and quality, and is expanding its customer base.
• It is also diversifying its product mix, with an increasing portion of green car electronics.
• Woory Industrial is expected to grow sales at a CAGR of over 25% and reach KRW530b by 2017.
• The company has a growing order backlog and is expanding its manufacturing presence in China, India, Thailand, and Slovakia.
• Its shares have weakened recently, but the analysts believe this is a good opportunity to accumulate as it benefits from the global auto industry's shift toward green cars.

Key Financial Insights

Woory Industrial Financials (Pre-Split)

• Revenue has shown consistent growth from 2011 to 2014.
• Net profit has also increased, reflecting improved operational efficiency.
• Gross margin has steadily improved, indicating better cost management.
• Operating margin has increased, suggesting better profitability.
• Dividend yield is expected to reach 2% in 2015, up from 0.3% in 2014.

Woory Industrial Financials (Post-Split)

• Sales and net profit have continued to grow after the spin-off.
• Operating margin has improved, showing better cost control and efficiency.
• EBITDA has also increased, reflecting strong operational performance.
• The company is expected to have a 25% CAGR in sales from 2014 to 2017.

Investment Highlights

• Outsourcing Trends: System parts makers are increasingly outsourcing to second-tier vendors like S&T Motiv and KET, which are gaining market share.
• Green Car Demand: The rising demand for green cars is a major driver for Woory Industrial, as it diversifies into green car electronics.
• Stabilizing Raw Material Prices: Both S&T Motiv and KET benefit from stable and decreasing raw material prices, which helps reduce costs.
• Technology Licensing: Woory Industrial earns technology licensing royalties from overseas subsidiaries, contributing to its profitability.
• Global Expansion: Woory Industrial has manufacturing subsidiaries in multiple countries and is expanding its presence in China.

Summary

• S&T Motiv and KET are niche market players in the automotive industry, benefiting from economies of scale and outsourcing trends.
• Woory Industrial is a leading player in HVAC actuators and is expected to gain a larger market share in the global auto parts industry.
• The increasing use of electronics in cars is a key growth driver for all three companies.
• Woory Industrial is expected to grow sales at a high rate due to its expanding customer base and product diversification.
• The company is also improving its financial performance through cost control and technological advancements.