Specialized in Industrial Monitors and Display Modules
The author is an analyst of NH Investment & Securities. He can be reached at
esshim@nhqv.com. -- Ed.
Tovis manufactures industrial monitors and TFT-LCD modules. Recently, the firm endured a period of sluggish earnings due to a decrease in casino monitor orders amid Covid-19 and business suspension at a major client. Moving ahead, however, an earnings turnaround and regrowth are expected on recovering orders from casinos and the blossoming of the automobile electrification industry.
Specialized in industrial monitors and display modules
Established in 1998 and listed on the Kosdaq in 2004, Tovis produces industrial monitors and TFT-LCD modules. Its industrial monitors are mainly supplied to global casino slot machine manufacturers, while its TFT-LCD modules are supplied to LG Electronics, LG Display, Sony, and Kyocera. After major customer LG Electronics suspended its smartphone business, Tovis’s main business focus shifted from display modules for mobile applications to those for automobiles.
Reopening of casinos already underway; production line for automobile electrification-related displays in operation
At the industrial monitor division, earnings are forecast to grow sharply thanks to the reopening of casinos, replacement of obsolete products, and pent-up demand for new products. Sales, which plummeted due to the impacts of Covid-19, are recovering from last year and are anticipated to show growth beyond mere recovery thanks to full-fledged economic re-opening this year.
Growth is also expected at the TFT-LCD module business in line with the trend toward larger displays for automobiles. A production line with capacity of W300bn pa dedicated to displays for automobile electrification, which started operations at the end of last year, should contribute to the expansion of overall sales this year, and is expected to become a new growth engine in the future.
Following an expected top-line recovery in 2022, strong profit expansion is anticipated in 2023, mainly centering on the automotive electronic display business. Accordingly, the firm’s 2022E P/E of 11.6x should fall to a 2023F P/E of 5.2x. In addition, brisk growth is expected for Seil Hi-Tech, an industrial film company acquired at end-2021, alongside the emergence of favorable synergy effects.