1. What Happened at A-Pro?
A-Pro reported KRW 33.8 billion in revenue, KRW -5.4 billion in operating profit, and KRW -6.6 billion in net income for H1 2025. These figures represent -49%, -238%, and -540% deviations from market consensus, respectively, indicating a significant underperformance. The slump in the secondary battery equipment sector was identified as the primary cause, while increased fixed costs and higher SG&A expenses also contributed to the decline in profitability.
2. Why the Earnings Shock?
A-Pro’s earnings deterioration is not merely a temporary phenomenon but rather the result of multiple factors:
- Secondary Battery Equipment Sector Downturn: The overall industry slowdown and delays/cancellations in client investments led to decreased sales.
- Intensified Competition: Aggressive pricing by Chinese competitors weakened A-Pro’s price competitiveness.
- Deteriorating Financial Health: A surge in debt-to-equity ratio raises concerns about the company’s financial stability.
- Adverse External Environment: Exchange rate volatility and high interest rates further exacerbated the company’s profitability.
3. What Should Investors Do?
With the potential for a sharp stock price decline in the short term, investors need to exercise caution. In the medium to long term, they should closely monitor the company’s efforts to improve earnings and the performance of its new businesses, while reviewing their investment strategies. A-Pro must identify the root causes of the decline in sales and operating profit and present concrete improvement measures. It also needs to restore investor confidence by demonstrating tangible results from new ventures and strengthening its financial health.