What’s Happening with Deoksan Techopia?

Deoksan Industry announced on July 24th that it increased its stake in Deoksan Techopia to 47.74%. This is interpreted as a move to secure management control, potentially sending a positive signal to the market. However, the company’s weak Q1 performance, with consolidated revenue of ₩24.2 billion and an operating loss of ₩9.7 billion, is raising concerns among investors.

Why the Earnings Slump?

The poor Q1 results are attributed to a combination of factors: the off-season for IT device sales, inventory adjustments by major clients, and rising raw material prices. The price increase of raw materials M and B, in particular, has added to the cost burden. Fluctuations in exchange rates likely also played a role.

Impact of the Macroeconomic Environment

  • Raw material prices and exchange rate fluctuations: Changes in crude oil prices and the KRW/USD and KRW/EUR exchange rates significantly impact Deoksan Techopia’s costs and profitability.
  • Interest rates and bond yields: Rising interest rates increase the burden of investment, while rising bond yields suggest concerns about an economic slowdown.
  • Global economic slowdown: A decline in the China Containerized Freight Index indicates decreasing global demand, which could negatively affect Deoksan Techopia’s exports.

Investment Strategies

Short-term: Caution is advised due to anticipated stock price volatility. It’s recommended to make investment decisions after gathering additional information.

Long-term: The growth potential of the OLED, secondary battery, and synthetic rubber markets can be considered, but investors must continuously monitor risk factors.