In a recent report, SK Securities has upgraded its recommendation for Tobis (051360) to ‘Buy,’ with a target price of 28,000 won. This represents a potential 49.3% increase from the previous day’s closing price, highlighting a bullish outlook for the company’s stock.

Main Contents of the Tobis Report

SK Securities’ 4Q24 Preview indicates that Tobis, excluding a one-off cost, continues to grow. The report forecasts 4Q24 sales at 173 billion won, a 24% year-over-year increase, and operating profit (OP) at 14.5 billion won, with an operating profit margin (OPM) of 9%, an 180% increase. However, these figures are lower than the previous year’s 17.9 billion won due to seasonal factors and one-off costs in the casino business, estimated at about 3.5 billion won. Despite these costs, the battlefield and subsidiaries continued to grow in sales and profit.

SK Securities’ 4Q24 Preview: Excluding a one -off cost for Tobis (051360) in SK Securities continues to grow. 4Q24 sales (YOY +24%, below) and OP 14.5 billion won (OPM 9%, +180%) were less than 173 billion won and OP 17.9 billion won. The lower session is due to the seasonal factors and one -off costs of the casino business (performance cost, estimated at about 3.5 billion won). Except for the casino division, the battlefield and subsidiaries continued to grow in sales and profit. QOQ profitability also continued to increase to 18 billion won (OPM 11%) to eliminate one -off costs. Improvement factors are high profitability subsidiaries (Gloquetec) appearance growth and the utilization rate of the electronics business.

Looking ahead, SK Securities’ 25 & 1Q25 Preview suggests continued growth. The expected sales for 1Q25 are 161 billion won, a 16% year-over-year increase, with an operating profit of 15.7 billion won and an OPM of 10%, a 55% increase. For the full year 2025, sales are projected at 731.7 billion won, a 17% increase, with an operating profit of 74.4 billion won and an OPM of 10%, a 27% increase. The electronics business, particularly the Seocheon Plant CAPA expansion, is expected to be completed in May, with a ramp-up in June and full operation by July. This expansion is expected to handle 1,000 to 150 billion won per year, addressing concerns about lower utilization rates.

In addition, SK Securities ’25 & 1Q25 Preview: Growth continues. 1Q25 expected sales of KRW 161 billion (yoy +16%, below), OP 15.7 billion won (OPM 10%, +55%), 25 estimated sales of KRW 731.7 billion ( +17%), OP 74.4 billion won (OPM 10%, +27% ) In the case of the electronics business, Seocheon Plant CAPA expansion (1,000 ~ 150 billion won per year) is expected to be completed in May and in July after Ramp-up in June. Considering the continuing order of volume model -oriented orders and 4Q25, concerns about lower utilization rate are limited.

Recent Developments and Practical Applications

Tobis’ recent performance and SK Securities’ positive outlook align with broader market trends. The electronics sector, in particular, has seen significant growth driven by increased demand for semiconductors and other electronic components. This trend is evident in the U.S. market as well, where companies like Apple and Intel have reported strong earnings due to robust demand for their products.

For investors, Tobis’ stock presents an attractive opportunity. The company’s diversified business model, which includes high-profit subsidiaries and a strong electronics division, provides a stable foundation for growth. Moreover, the Seocheon Plant CAPA expansion is a strategic move that will likely enhance Tobis’ competitive edge in the electronics market.

However, it’s essential to consider potential risks. The casino business, which accounted for a significant portion of the one-off costs, remains a concern. Any further volatility in this sector could impact Tobis’ overall performance. Additionally, the global economic landscape, including geopolitical tensions and supply chain disruptions, could pose challenges.

Analyst Insights and Market Consensus

Kwon Min-kyu, an analyst at SK Securities, maintains a target price of 28,000 won, which is consistent with the previous year’s target. However, there has been a reduction from the 32,000 won target presented on June 19, 2024, to the current 28,000 won. This adjustment reflects a more conservative outlook in the face of market uncertainties.

Kwon Min -kyu, an analyst at SK Securities, is the same as 28,000 won, which is 28,000 won, which is 28,000 won. In the past year, SK Securities’ target price has been presented, and after the presentation of 32,000 won on June 19, 24, it has been reduced to 28,000 won in this report.

The consensus among analysts is similarly conservative. The average target price for Tobis over the last six months is 27,500 won, which is slightly lower than the 28,750 won average from the previous six months. This indicates a cautious approach to Tobis’ future stock performance, reflecting broader market sentiments.

The goal of 28,000 won presented by SK Securities today is similar to the average target price of 27,500 won for the last six months. For reference, the average target price of all securities firms in the last six months has fallen -4.3% compared to 28,750 won, which was the average six -month average goal. This shows that the overall analysis of Tobis’s future stock prices has changed conservatively.

Conclusion

SK Securities’ bullish stance on Tobis, coupled with the company’s strategic expansions and diversified business model, presents a compelling case for investors. However, the market’s conservative outlook and potential risks in the casino sector warrant careful consideration. As Tobis continues to grow, investors should monitor developments closely and stay informed about market trends and geopolitical factors that could impact the company’s performance.