Furonteer: Beneficiary of Growing Demand for Self-driving Car Cameras

The authors are analysts of Shinhan Investment Corp. They can be reached at hyungwou@shinhan.com and michlshim94@shinhan.com, respectively. -- Ed.

Domestic supplier of automotive camera equipment

Furonteer, a subsidiary of inspection equipment maker HyVision System, was listed on the KOSDAQ on February 23, 2022. The company produces camera equipment and components, with the former accounting for 59% of sales (automotive 46%, mobile 13%) and the latter 41% as of 1Q22. As a key supplier to domestic camera module makers, Furonteer is currently focused on expanding its supply of process equipment for self-driving car cameras.

Self-driving cars↑→ camera adoption↑→ equipment demand↑

For 2022, we forecast sales at KRW32.7bn (+47% YoY) and operating profit at KRW3.7bn. Growth of the market for automotive-use cameras will likely emerge as the main driver of earnings improvement going forward.

Demand for automotive cameras should grow in earnest alongside rising adoption of semi-and fully-autonomous vehicles. Playing a key role in providing visual data and environmental awareness, camera systems are a prerequisite for all levels of autonomous driving.

The global market for automotive cameras is projected to expand from 150mn units in 2021 to 220mn in 2023, according to Strategy Analytics, with YoY growth assumed at 30% for 2022 and 17% for 2023. The pace of growth should accelerate once self-driving cars arrive in volume. Cars, compared with mobile devices, require higher-ASP camera modules at larger numbers. Annual market demand is projected at KRW45tr for smartphone-use camera modules and at KRW27tr for automotive-use cameras.

Growth in market demand for automotive cameras will likely lead to the increase in capex spend by camera module makers and a subsequent rise in client demand for related equipment.

Beneficiary of growing demand for self-driving car cameras

For Furonteer, we recommend focusing on client demand growth and clientele diversification. The global market for automotive cameras is forecast to expand at a CAGR of 16% from 2021 to 2028. The sales share of automotive camera equipment in Furonteer’s total sales is expected to increase from 25% in 2021 to 55% by 2023 as a result. Meanwhile, the company can tap into the clientele of parent HyVision System for further growth. Building on its partnership with top-tier domestic mobile camera module makers, Furonteer should be able to diversify its revenue stream through further expansion in the automotive camera industry.