The author is an analyst for NH Investment & Securities. He can be reached at kyeongkeun.kang@nhqv.com -- Ed.
Furonteer supplies key assembly and inspection equipment for autonomous driving sensing cameras. Backed by the increasing deployment of high-quality sensing cameras by a major end-user (an EV maker in North America), the firm has secured solid mid/long-term earnings growth.
Produces automation equipment for automotive camera modules
Furonteer specializes in the production of automation equipment for automotive camera modules. It supplies key assembly (Active Align, Dual Align) and inspection (Intrinsic Calibration, EOL) equipment to major clients such as Samsung Electronics, LG Innotek, and MCNEX.
Furonteer’s order backlog stood at W8.42bn (automotive electronics W7.09bn, other W1.33bn) at end-3Q23. On Nov 2, the firm signed a contract with Taiwan’s Primax to supply automotive camera module production equipment worth W6.0bn. Primax currently supplies automotive camera modules to a North American EV maker. Although the order size is not large, it is noteworthy that the firm’s equipment was adopted for the client’s transition from autonomous driving HW 3.0 to HW 4.0 (which saw a rise from 9 to 12 cameras).
Focus on long-term direction rather than short-term earnings
Approximately 85% of sales at the automotive electronics division are generated from the North American EV maker. Thanks to greater deployment of high-quality sensing cameras, sales growth at the division has been outpacing production volume growth at the end-user. We forecast 2024 sales of W62.5bn (+28.9% y-y) and OP of W11.9bn (+31.0% y-y; OPM of 19.1%). Although earnings may decline in 4Q23, and there may be order gaps in early-2024, we recommend focusing on Furonteer’s long-term growth potential, as significant order expansion is expected after 1H24. We note that the company provides key equipment in the ADAS/autonomous driving market.