1. OSung Advanced Materials’ 2025 Half-Year Performance Analysis: What Happened?
OSung Advanced Materials’ consolidated revenue for the first half of 2025 was KRW 81 billion, and operating profit was KRW 14.7 billion, a decrease compared to the same period last year. Looking at Q2 alone, the company recorded sales of KRW 39.6 billion, operating profit of KRW 6.2 billion, and net profit of KRW 3.4 billion, exceeding expectations. However, it’s important to consider that market expectations were low. The biggest issue is the acquisition of Hwail Pharmaceuticals. OSung Advanced Materials acquired a 23.64% stake in Hwail Pharmaceuticals in June 2025, securing management rights. In addition, the company is actively pursuing new businesses such as cannabis medical, real estate development, and international freight forwarding.
2. Key Issue Analysis: Why?
2.1 Continued Slump in the Display Business: The downturn in the display materials business continues due to intensified global competition and sluggish demand. Despite the growth of the 4K/8K TV market, fierce price competition is making it difficult to secure profitability.
2.2 Hwail Pharmaceuticals Acquisition: Coexistence of Opportunity and Risk: The acquisition of Hwail Pharmaceuticals offers a new growth engine through expansion into the pharmaceutical/bio business, but there are also risks such as the burden of acquisition costs and uncertainties in the business integration process.
2.3 Uncertainty of New Businesses: The cannabis medical business is sensitive to regulatory changes, and the real estate development business is highly affected by economic fluctuations. Both businesses are yet to make significant contributions to revenue.
3. Investment Strategy: So What?
3.1 Short-term Investment Strategy: Closely monitor efforts to reduce display business inventory and secure new customers, as well as improvements in short-term financial indicators following the acquisition of Hwail Pharmaceuticals. Risk management should also be a focus, considering exchange rate fluctuations, the possibility of interest rate hikes, and global economic volatility.
3.2 Mid- to Long-term Investment Strategy: It is crucial to check the performance of new businesses, such as the clinical results and licensing approvals for cannabis medical and the success of real estate development projects. The success of the strategy to reduce the proportion of the display business and expand new businesses will be the key driver of long-term corporate value growth.
4. Action Plan for Investors
- – Continuously monitor OSung Advanced Materials’ diversification strategy and the progress of new businesses.
- – Make investment decisions from a mid- to long-term perspective, not being swayed by short-term stock price fluctuations.
- – Carefully analyze changes in the financial structure and synergy effects following the acquisition of Hwail Pharmaceuticals.
Frequently Asked Questions (FAQ)
What are the main businesses of OSung Advanced Materials?
OSung Advanced Materials operates various businesses including display materials, cannabis medical, real estate development, and international freight forwarding. Recently, it entered the pharmaceutical/bio business through the acquisition of Hwail Pharmaceuticals.
How will the acquisition of Hwail Pharmaceuticals affect OSung Advanced Materials?
The acquisition of Hwail Pharmaceuticals is expected to diversify the business by entering the pharmaceutical/bio sector and secure new growth engines. However, acquisition-related costs and uncertainties in the business integration process can act as risk factors.
What are the key points to consider when investing in OSung Advanced Materials?
Investors should consider the continued slump in the display business, the uncertainty of new businesses, and the risks associated with the acquisition of Hwail Pharmaceuticals. They should also pay attention to changes in macroeconomic indicators such as exchange rates, interest rates, and global economic volatility.