As the COVID-19 situation continues globally, investment in 5G infrastructure is affected by the delay, according to the analysis.
Eugene Investment & Securities lowered its target price of OE Solution from 59,000 won to 42,000 won on the 16th. The investment opinion maintained a 'buy'.
"OE Solution's sales are also expected to be sluggish in the fourth quarter due to delayed investment in 5G infrastructure due to the continued situation of COVID-19 in Korea and overseas," said Eugene Investment & Securities.
OE Solution produces components used in high-speed communication. It occupies the first place in the domestic market for optical transceivers, which are essential parts for 5G communication.
OE Solution saw its sales and operating profit fall 26.4% and 69.6% in the third quarter of 2021, respectively, from the same period in 2020.
This is due to a 78.6% drop in sales of FTTH (in-home optical cable) and MSO (General Cable Broadcasting Service) products compared to the third quarter of 2020.
OE Solution is expected to see its sales decline in the fourth quarter following the third quarter due to a delay in expanding 5G investment in countries around the world, including South Korea, due to COVID-19.
OE Solution is expected to generate 23.2 billion won in sales and 2.7 billion won in operating profit on a consolidated basis in the fourth quarter of 2021.
However, OE Solution is expected to increase its performance in 2022 based on its base of customers in the U.S. and Japan, its main overseas markets.
Reporter Lee Ji-sun stockmk2020@gmail.com
