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Tovis-Growth to be led by sales of curved monitors for casino gaming machines

May 19, 2014 15:22|May 19, 2014 15:22
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With sales of the firm’s newly launched casino gaming machine monitors (rolled out in March) set to be fully reflected in 2Q14, we expect Tovis to post record-high quarterly sales and operating profit figures this quarter. Moreover, with the gaming monitors receiving favorable feedback, we expect demand for the monitors to rise rapidly going forward.


1Q14 results better than expected

- Tovis posted better-than-expected results, including sales of W103bn (up 7.3% y-y, down 9.27% q-q) and operating profit of W7.7bn (up 45% y-y, TTP q-q).

- While liquid crystal module (LCM) sales slid 20% y-y, we believe that the firm recorded surprising 1Q14 earnings thanks to higher sales contributions from both touch panels (up 100% y-y) and casino gaming machine monitors (up 30% y-y).

- In detail, the robust touch panel sales were driven by both the expansion of low- and mid-end smartphone lineups at client companies and internal sourcing of tempered glass. Meanwhile, the sales contribution of casino gaming monitors was bolstered by sales of new products (including curved monitors) from Mar 2014.

To post highest quarterly results in 2Q14

- Thanks to the expansion of its clients’ low-priced smartphone lineups, we expect Tovis’s LCD module and touch panel sales to rise going forward.

- With the sales of newly launched casino machine monitors (rolled out in March) to be fully reflected in 2Q14, we believe that Tovis will post record-high quarterly sales and operating profit figures this quarter. Moreover, the firm’s operating margin should improve q-q on the expansion of its casino monitor product lineup.

2014 OP to jump 68.6% y-y; shares trading at 2014E P/E of 7.0x

- We expect Tovis’s 2014 sales to grow 4.7% y-y to W495bn, while the company’s operating margin should expand by 2%p y-y on the increasing earnings contribution from newly launched casino monitors.

- Given the casino facility expansion that is slated to be carried out across the globe, we believe that Tovis’s shares-which are currently trading at a 2014E P/E of only 7.0x-possess strong valuation merit.
*Source: Woori Investment & Securities Co.