[Click e-Stock] "Innowireless Target Price Raised... Expected to Benefit in 5G SA Era"

On March 4, Hana Securities raised its target price for Innowireless to 60,000 won, maintaining its "Buy" investment opinion. The firm explained that even in the era of standalone 5G (SA), the company is expected to deliver positive earnings thanks to increased revenue from equipment and related sales.

Hongshik Kim, an analyst at Hana Securities, stated, "We are raising Innowireless’s 12-month target price (previously 40,000 won) by 50%." He added, "This increase is the result of raising the target price-to-book ratio (PBR) to 3 times, reflecting the recent rise in share prices of domestic telecommunications equipment companies." He further commented, "Given that quarterly earnings improvements are already being observed and that the company is expected to benefit significantly from the evolution toward 5G SA in the second half of this year, we still consider our target price to be on the conservative side."

Hana Securities forecast that Innowireless’s revenue would increase significantly in the 5G SA era, particularly due to strong small cell sales. The firm expects domestic supply, which had been temporarily suspended due to hacking issues, to resume, while overseas supply volumes are also likely to rise through diversification of sales channels. Furthermore, the company projected that higher-margin business such as test equipment sales, combined with defense-related sales, would contribute to profit improvement.

Analyst Kim noted, "The United States has already announced a frequency auction, and full-scale investment is expected to begin in the second half of this year." He continued, "In Korea as well, as the transition to 5G SA accelerates, demand for test equipment is gradually increasing, and sales of test equipment are expected to rise in the second half of this year." Regarding small cells, he added, "Considering deferred demand, supply volumes could be substantial this year, making small cells a key revenue driver once again."

The target price also reflects the company’s low multiples (i.e., low valuation relative to profitability). Based on this year’s projected results, the PBR is estimated at 2 times, and the price-to-earnings ratio (PER) at around 15 times. Analyst Kim explained, "The main reason for these low multiples is short-term earnings weakness. However, previous cases show that when the telecommunications equipment sector recovers, rapid catch-up rallies occur. Given the possibility of rotational buying, Innowireless could experience significant long-term gains."

This content was produced with the assistance of AI translation services.