[Click eStock] "FineMTech to Benefit from Both Samsung and North America Foldables... Leading Beneficiary of the 'Foldable New Normal'"

On August 4, Meritz Securities identified FineMTech as the only domestic component manufacturer that can simultaneously benefit from the expansion of foldable smartphones by Samsung Electronics and a North American smartphone company. The brokerage highlighted FineMTech as the leading beneficiary of the growing foldable market. The fair value target price was set at 12,000 won, with the current stock price range evaluated as an optimal time to increase holdings.

Yang Seungsu, a researcher at Meritz Securities, stated in a report released on this day, "This year, with the entry of a North American smartphone company into the foldable market, the stock price trend is likely to differ from the past. A new investment cycle for foldable-related stocks may begin."

Meritz Securities assessed that the Samsung Galaxy Z Fold8, released this year, is enjoying a stronger-than-expected initial market response. Accordingly, the company expects Samsung Electronics' pre-order sales for foldable smartphones to reach an all-time high this year and anticipates an upward revision of annual foldable shipment forecasts as well.

The brokerage especially noted that a North American smartphone company is planning to unveil its first foldable smartphone in September this year. In the past, stocks related to foldable devices saw strong performance during unpack events and pre-order periods, followed by a slowdown after the events ended. However, Meritz explained that the market environment may shift this year.

Researcher Yang commented, "The entry of the North American company into the market will expand foldable demand beyond existing Android users to non-Android users and the tablet user base. As a result, the growth potential of the foldable market will rise to a new level."

Market research firm Omdia also projected that, based on the North American company's market entry and the launch of new form factors such as wide fold, the global foldable smartphone market will grow at an average annual rate of 13% through 2033.

Meritz Securities pointed to FineMTech as the biggest beneficiary of this market expansion. The brokerage highlighted that FineMTech can supply key foldable components to both domestic clients and North American clients, distinguishing it from competitors.

In its business segment targeting domestic clients, the expansion of laser etching processes applied to metal plates was cited as a core growth driver. As the adoption rate of laser etching rises, FineMTech is expected to achieve both a recovery in market share and an increase in average selling price. Therefore, annual sales to domestic clients are forecast to record meaningful growth compared to the previous year.

The company’s mid- to long-term growth prospects were also assessed positively. As Samsung Electronics plans to expand the launch of next-generation foldable products with greater manufacturing complexities, such as rollable and triple-fold2, FineMTech's strength in advanced laser etching technology is expected to grow even more prominent.

Researcher Yang explained, "The importance of laser etching technology will increase as foldable products evolve to the next generation. As manufacturing difficulty grows, FineMTech’s technological entry barriers will also be reinforced."

He also evaluated that the business targeting North American clients possesses strong growth potential. Given the high technical complexity of the laser etching process, FineMTech's early success in securing high yields puts it in a position to achieve substantial market share.

Currently, there are strict requirements for product completeness, and some components are facing low initial yields, which is limiting production quantities. However, if consumer response proves to be positive after product unveiling, production plans and component orders are expected to expand starting in the fourth quarter of this year. The expected launch of additional models in 2028 was also presented as a long-term growth driver.

The outlook is for a continued trend of earnings improvement. Meritz Securities noted that, from the second quarter, shipments for foldable products have been ramping up, and foldable-related revenue is projected to account for 83% of this year's total sales. In addition, FineMTech’s status as the only company able to supply both Samsung Electronics and North American clients is expected to act as a premium factor.

Researcher Yang emphasized, "FineMTech is virtually the only company that can benefit from the expansion of foldable device launches by both domestic and North American clients. Considering the growth potential of the foldable industry, the current share price range is the right time to increase holdings."

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