[Click e-Stock] "Eyesvision's Mercury Stake Worth More Than Its Market Cap... Record Quarterly Earnings, Too"

Analysts say Eyesvision holds assets worth more than its current market capitalization based solely on the value of its stake in its subsidiary Mercury. Expectations are growing that the company will be revalued as growth in its budget mobile service business coincides with the launch of a used-phone trading platform and the expansion of its optical fiber business for artificial intelligence (AI) data centers.

Founded in 1992, Eyesvision is a budget mobile virtual network operator (MVNO) that was listed on the KOSDAQ market in 1997. Through its subsidiary Mercury, it also operates optical fiber and telecommunications equipment businesses. Its preliminary consolidated revenue for the third quarter of this year was KRW 60.1 billion, up 29.0% from the same period a year earlier, while operating profit rose 230% to KRW 5.3 billion.

"Operating profit for the first three quarters totaled KRW 7.5 billion, already more than double the KRW 3.4 billion recorded for the entire previous year. However, as of the November 9 closing price, its market capitalization was only KRW 27.3 billion," said Jeon Woobin, an analyst at Value Finder. "Based on KRW 164.3 billion in equity attributable to owners of the parent, its price-to-book ratio (PBR) is around 0.17."

He also identified asset value as a noteworthy factor. The value of Eyesvision's stakes in listed companies, including Mercury, Hansung Cleantech, and WIZIT, stands at KRW 44.9 billion, while the book value of its stake in a real estate fund is KRW 35.9 billion. Their combined value of KRW 80.8 billion is about three times the company's market capitalization. The value of its Mercury stake alone is KRW 37.4 billion, exceeding its current market capitalization.

Its core budget mobile service business is also growing. Eyes Mobile's share of new subscribers, measured by number portability, rose from 7.1% in the first quarter of this year to 8.5% in the third quarter. Subscribers to partner plans offered with Olive Young and Daiso increased 132% from a year earlier. Cumulative used-phone revenue through September also doubled year over year to KRW 16.8 billion.

"If the used-phone trading platform scheduled to launch in November is combined with the budget mobile subscriber base, it could generate synergies through a recurring transaction model linking device purchases, sales, and activations," Jeon said.

Improved performance at subsidiary Mercury, which accounts for more than half of consolidated revenue, is also a positive factor. Mercury posted revenue of KRW 38.2 billion and operating profit of KRW 4 billion in the third quarter, aided by increased optical fiber supplies from its wholly owned subsidiary Mercury Optical Communication. Revenue rose 29.1% from the same period a year earlier, and the company returned to operating profitability.

Mercury Optical Communication plans to establish a production facility spanning about 9,000 pyeong in Mungyeong, North Gyeongsang Province, by February 2027 to meet demand for high-density, multi-core optical fiber cables for AI data centers. Of the KRW 56 billion in proceeds from the sale of the Incheon factory site and buildings to Hanmi Semiconductor, the remaining KRW 44.8 billion is also expected to come in by February 2027. The value of Mercury's supply contract for KT Wi-Fi 7 access points (APs) has also increased from KRW 8.8 billion to KRW 14.2 billion.

"Despite record quarterly results, the company's market capitalization remains far below the value of its assets," Jeon said. "The expansion of the budget mobile subscriber base, synergies with the used-phone platform, and growth in Mercury's optical fiber business for AI data centers are expected to drive a revaluation of the company's value."

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