1. Nepes H1 2025 Earnings: Key Highlights and Takeaways

Nepes recorded sales of KRW 130.9 billion, operating profit of KRW 7.9 billion, and net income of KRW 13.2 billion in H1 2025. While sales slightly increased compared to the previous quarter, operating profit declined due to increased investment and sluggish performance in some business areas.

2. Business Segment Analysis: Growth Potential and Risks

  • Semiconductor: Benefiting from AI and HPC market growth, with strong advanced packaging technology. However, potential risks include client production plan changes and intensifying competition.
  • Electronic Materials: Expected new sales from chemical localization. Low capacity utilization remains a factor affecting profitability.
  • Secondary Batteries: Localization of ESS and EV/HEV battery components. Needs to address intensifying market competition and rapid technological changes.

3. Financial Stability: Strengths and Risks

While debt-to-equity and net debt ratios remain high, they have improved year-on-year. Operating cash flow is stable, but financial risks remain due to interest rate and exchange rate fluctuations.

4. Investment Strategy: Neutral Stance, Future Monitoring Points

Nepes has mid-to-long-term growth potential based on system semiconductor market growth and advanced technology. The expansion of the AI market provides positive momentum, with growth also expected in the secondary battery segment. However, considering risks such as high debt ratios and interest/exchange rate volatility, the current investment recommendation is ‘Neutral’. Monitor the following points for future investment strategy adjustments:

  • New semiconductor orders and client partnerships
  • Recovery of operating rate in the electronic materials segment
  • New client acquisition and technological development achievements in the secondary battery business
  • Debt ratio management and efforts to mitigate debt risk
  • Interest rate and exchange rate fluctuations